JOHANNESBURG (Reuters) -South Africa’s rand gained on Monday, having initially struggled for momentum against a stronger dollar, as the price of gold, of which the country is an exporter, rose on the prospect of further sanctions on Russia.
At 1700 GMT, the rand traded at around 14.5814 against the dollar, 0.45% stronger than Friday’s close.
The dollar made a firm start to the week, as the monthly U.S. jobs report indicated a strong labour market that is likely to keep the Federal Reserve on track to maintain its hawkish policy stance.
Higher rates in developed markets tend to drain capital from higher-yielding but riskier emerging markets such as South Africa.
Gold, however, supported the rand, with spot gold rising 0.47% to $1933.28 per ton, as investors also focused on talk of more sanctions against Russia over its invasion of Ukraine.
“As we head into the new week, Russia is, yet again, in the headlines, as bans on Russian gas imports to Europe come under discussion by European leadership,” said Bianca Botes, director at Citadel Global.
While Russia-Ukraine peace talks dragged on, reports of Russian atrocities led Germany to say the West would agree to impose more sanctions in the coming days.
On Friday, ratings agency Moody’s had revised South Africa’s outlook to “stable”, saying the country’s improved fiscal outlook would help the government to stabilise its debt burden over the medium term.
In fixed income, the yield on the benchmark 2030 bond fell 4.5 basis points
Stocks were flat, with the Johannesburg Stock Exchange’s Top-40 Index up 0.01% to 68,941 points and the broader All-Share Index down 0.1% to 75,835 points.
(Reporting by Olivia Kumwenda-Mtambo, Rachel Savage and Emma Rumney; Editing by Kirsten Donovan and Barbara Lewis)
