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Rand opens stronger after positive data

At 0650 GMT, the rand traded at R16.93 versus the dollar.
Image: Waldo Swiegers, Bloomberg

The rand opened stronger on Friday and was on course for gains of roughly 2% against the dollar this week, after the first current account surplus in 17 years and an upbeat US jobs report.

At 0650 GMT, the rand traded at R16.93 versus the dollar, around 0.3% firmer than its previous close.

Government bonds were flat, with the yield on the 2030 bond at 9.27%.

On Thursday, central bank data showed a 1.3% of gross domestic product (GDP) surplus on the current account, which has long been a sore spot for Africa’s most industrialised economy. That added to optimism from the US economy creating jobs at a record clip in June.

Although the rand has enjoyed a good week, it is still down some 17% against the US currency so far this year, partly a reflection of deep-seated concerns about the health of domestic public finances.

The finance ministry predicts a deficit on its main budget of more than 14% of GDP this fiscal year and an economic contraction of over 7% in 2020. An economic recession that began last year deepened in the first quarter, before the coronavirus crisis really took hold, data showed this week.

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