JOHANNESBURG (Reuters) -The South African rand gained strongly on Thursday, touching its highest in more than three months and extending the previous day’s rally as cooling U.S. inflation further dented the dollar.
The risk-sensitive rand traded as strong as 17.9125 to the dollar by 1510 GMT, its firmest since April 5.
The dollar continued to slump on global markets in the wake of a slower-than-expected U.S.
inflation reading on Wednesday that raised hopes the Federal Reserve will hit the pause button on interest rate hikes after this month.
The rand’s gains came despite local mining output declining by 0.8% in May following a revised rise of 3.2% in April.
Miners face headwinds including the worst rolling blackouts on record, a major drag on power-hungry sectors.
Senior economist at FNB, a local financial services company, Thanda Sithole said the decline in mining production reflected sustained weakness in the sector.
However mining stocks performed well on Thursday, benefiting from the stronger rand and rising crude import prices, according to Viv Govender, a portfolio manager at Rand Swiss.
The resources index rose about 1.7%, helping the Johannesburg Stock Exchange’s All-share index close up 1% at 77,317 points.
South Africa’s benchmark 2030 government bond also strengthened, as the yield fell 6 basis points to 10.400%.
(Reporting by Tannur Anders and Kopano GumbiEditing by Alexander Winning, Sonia Cheema, William Maclean)
