JOHANNESBURG (Reuters) -The South Africa rand extended gains on Thursday as risk sentiment improved on bets for a deeper interest rate cut this month in the United States, analysts said.
At 1502 GMT, the rand traded at 17.73 against the dollar, 0.81% firmer than its closing level on Wednesday.
The rand strengthened against a weaker dollar on Wednesday after U.S. job openings dropped to a 3-1/2-year low in July.
Andre Cilliers, currency strategist at TreasuryONE, said bets for a 50 basis rate cut by the Federal Reserve increased after the data.
“Hopes of a larger Fed rate cut have seen risk sentiment improve and the dollar retreat … We expect the local currency to consolidate further within the recent R17.70/R18.00 range ahead of tomorrow’s (U.S.) payroll numbers,” Cilliers said.
Like other risk-sensitive currencies, the rand often takes cues from global drivers like U.S. monetary policy in addition to local factors.
Domestically, central bank data showed South Africa’s current account deficit narrowed in the second quarter to 0.9% of gross domestic product (GDP) from 1.5% of GDP in the first quarter.
Focus on Friday will also be on local gold and forex reserves data for August.
South Africa’s benchmark 2030 government bond was stronger, as the yield slipped 2.5 basis points to 9.01%.
(Reporting by Tannur Anders and Bhargav Acharya; Editing by Michael Perry and Mark Potter)
