South Africa’s rand firmed more than 1% on Tuesday to a three-day best after President Cyril Ramaphosa said China would invest $14.7 billion (R195 billion) in the local economy, spurring some offshore demand for the currency.
At 11:45 GMT the rand had firmed 1.04% to 13.3200 per dollar, its firmest since Thursday.
Ramaphosa was speaking at a news conference on Tuesday after talks Chinese President Xi Jinping.
Traders noted that a sliding greenback had lifted most emerging market currencies, and that the size of the rand’s move firmer was partly down to low trading liquidity.
News of the investment by China had soothed sentiment rattled by a score of patchy economic indicators, traders said.
“The news that China would invest in the local economy has supported some foreign inflows,” said senior trader at Standard Bank Oliver Alwar.
“One of the low hanging fruit for policy makers is boosting sentiment and the announcement by the Brics envoys could tip the scales a little bit,” said economist at ETM Analytics Halen Bothma.
Leaders from the Brics group of emerging economies – Brazil, Russia, India, China and South Africa – will meet from Wednesday until Friday in Johannesburg for their 10th annual summit.
The rand has seen volatile trade in the past two weeks, and fell sharply last Thursday when the central bank warned that risks to inflation were rising and the outlook for economic growth had worsened.
The currency however remains a favoured carry-trade target owing to the return offered by low inflation and relatively high lending rates against a backdrop of economic reform promised by Ramaphosa since his election in February.
Bonds also gained, with the yield on the benchmark paper due in 2026 up 3.5 basis points to 8.74%.
Stocks were marginally firmer, with the Johannesburg Stock Exchange’s Top-40 index up 0.53% at 50 751 points.