South Africa’s rand firmed on Wednesday, extending an overnight rally, as dollar buyers favoured caution and assessed U.S. mid-term election results to gauge the possible impact on policy and consequences for global growth.
At 0640 GMT, the rand was 0.21 percent firmer at 14.0900 per dollar, having reached a one-week best of 14.0300 overnight as the Democratic Party wrested control of the U.S. House of Representatives from the Republicans.
The dollar index was down 0.26 percent in early trade.
“The rand is holding firmly onto its gains, as it wanders in territory last seen in October, while the dollar remains under pressure,” said Bianca Botes, treasury manager, Peregrine Treasury Solutions.
The rand is down nearly 15 percent against the greenback this year, but has made strides in recent weeks due to a return of global risk appetite and easing of local political concerns.
With the 14.20 technical resistance level cleared, the currency is seen testing the 14.00 pivot, which could unlock further gains, traders said. Thursday’s rate decision by the Federal Reserve will likely temper rand bulls in the session.
Bonds also firmed, with the yield on government’s 10-year paper down 2.5 basis points to 9.115 percent.
Stocks were set to open flat at 0700 GMT, with the JSE securities exchange’s Top-40 futures index up 0.08 percent.