JOHANNESBURG: South Africa’s rand climbed to its firmest level in two weeks on Friday, driven higher by a court ruling upholding corruption charges against President Jacob Zuma. A weaker dollar and a global surge in risk appetite also contributed. Stocks inched up in line with a global equities rally, with world stocks advancing for a fourth straight day on expectations of broad-based global growth, but domestic gains remained capped by technical factors. The rand had raced 1.5 percent stronger at 13.2750 per dollar, its firmest since Sept. 25, outpacing fellow emerging market currencies that made modest gains in early trade.
The rand shot past successive technical milestones and eventually breached the 30-day moving average of 13.3279 after South Africa’s Supreme Court of Appeal upheld a ruling by a lower court to reinstate corruption charges against Zuma. “Today the catalyst for the rand’s positive moves has definitely been that court ruling,” said currency strategist at IG Markets Shaun Murison. Zuma, who denies any wrongdoing, is unpopular with many investors and the court ruling increased the prospect of his removal. In a list of 17 emerging market currencies tracked by Reuters, the rand was by far the best performer, with only the Russian rouble and Polish zloty close to matching its gains. The rand also lapped up demand as the dollar and treasuries tanked following a disappointing inflation print in the U.S. and lingering concerns that President Donald Trump’s stimulus plan will not be passed. Some traders are betting the rand could hold on to the gains despite Zuma saying later he would appeal the decision. “I’m thinking investors and FX traders are slightly bored of attacking the rand over political issues as it’s never ending,” said senior dealer at National Bank of Kuwait Brad Knight. In bonds, the yield on the government paper due in 2026 was down 5.5 basis points to 8.6 percent. On the equities market, the Top-40 index rose 0.19 percent to 51,450.39. The wider All-Share index added 0.22 percent to 57,876.60 after earlier hitting a record high of 57,920.52. The market’s upward trend has been constrained by technical factors, with the 14-day RSI, a momentum indicator, suggesting the main indices are now overbought.
