JOHANNESBURG (Reuters) -South Africa’s rand strengthened on Wednesday, with analysts pointing to a surge in gold prices as the reason for the currency’s recovery.
At 1750 GMT, the rand traded at 18.83 against the U.S.
dollar, 0.7% stronger than its previous close.
The currency, hurt by weak economic data, is down 2.8% against the greenback since the beginning of the year.
“The recent gold price surge has offered the rand some relief,” ETM Analytics said in a research note, adding that the recovery will likely be limited.
Gold prices held above the $2,100 level on Wednesday, near a record peak hit in the previous session.
While the rand often tracks global economic developments and is considered a riskier asset, it is also used by investors as a proxy for the yellow metal, one of South Africa’s major exports.
The dollar index slipped 0.4% against a basket of currencies after U.S. Federal Reserve Chair Jerome Powell said continued progress on inflation “is not assured”, though he still expected the central bank to cut interest rates later this year.
On the Johannesburg stock market, the Top-40 index closed over 2% higher.
South Africa’s benchmark 2030 government bond was up marginally, with the yield down 0.5 basis point at 10.095%.
(Reporting by Anait Miridzhanian and Bhargav Acharya; Editing by Rashmi Aich and Ed Osmond)
