JOHANNESBURG (Reuters) -The South African rand gained on Wednesday as a rebound in global stock markets boosted risk sentiment and investors awaited U.S. labour market data later this week for hints on the future interest rate path of the world’s biggest economy.
At 1416 GMT, the rand traded at 18.35 against the dollar, about 0.8% stronger than its previous close. The South African currency had gained more than 1% against the greenback earlier in the day.
“The South African rand has strengthened this morning, buoyed by improved global market sentiment,” said Zain Vawda, market analyst at MarketPulse by OANDA.
The release on Friday of a weaker than expected U.S. July payrolls report stoked recession worries and led to a plunge in global equities on Monday, with traders fleeing to safe-haven assets.
But Federal Reserve policymakers pushed back on Monday against the notion that the economy is close to recession and indicated the U.S. central bank would need to cut rates to avoid such an outcome.
An influential Bank of Japan official also played down the chances of a near-term rate hike in Japan on Wednesday, soothing investors’ concerns that a further jump in the value of the yen could again rock global markets.
“Tomorrow’s U.S. jobless claims number will now be sharply in focus for confirmation of the weakening U.S. labour market,” said Andre Cilliers, currency strategist at TreasuryONE.
Like other risk-sensitive currencies, the rand often takes its cue from global drivers such as U.S. economic data and global monetary policy in addition to local factors.
On the domestic front, South Africa’s net foreign reserves rose to $59.165 billion at the end of July from $58.437 billion in June, central bank data showed on Wednesday.
On the Johannesburg Stock Exchange, the blue-chip Top-40 index last traded up about 1.2%. South Africa’s benchmark 2030 government bond was unchanged, with the yield at 9.375%.
(Reporting by Tannur Anders; Editing by Paul Simao and Mark Potter)
