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By Siphelele Dludla 
9h ago
JOHANNESBURG – The RAND surged to a 10-month high yesterday as risk appetite soared on renewed hopes for a U.S. stimulus package and the Federal Reserve’s promise to keep rates low until the economy recovers .
The local currency changed hands at R14.67 per dollar last night, reaching its pre-Covid-19 levels as US lawmakers moved a little closer to agreeing to a $ 900 billion (R13.37 trillion) pandemic aid package. ) which could include $ 600 stimulus checks and extended unemployment benefits.
The US Fed also kept benchmark interest rates close to zero and vowed to use the full range of central bank tools until the job market and economy recovered from the pandemic. Analysts said the rand also rebounded in hopes that a vaccine launch would support a global recovery.
South African stocks benefited from sentiment toward riskier assets, and mining, bank and resource stocks posted significant gains. The JSE All Share Index rose 1.52 percent to exceed the 60,000 point level for the first time since August 2018, while the Top40 index rose 1.49 percent to 55,323 points.
The mining index accelerated 3.13 percent to 55,823 points, banks advanced 0.38 percent to 6,941 points, while resources strengthened 2.82 percent to 58,277 points.
General retailers continued a four-day winning streak, rising 1.2 percent before reversing their gains to drop 1.57 percent to 4,539 points.
Markets.com chief analyst Niel Wilson said global factors had seen the dollar retreat to the benefit of emerging markets.
“Market sentiment seems fueled by hopes that US lawmakers can reach a stimulus deal and the Brexit talks are close to a breakthrough, though they are still hanging by a thread and the deadline is just two weeks away. “Wilson said.
The rand has seriously returned from its weakest level of R19.05 against the dollar in April at the peak of the initial hard lock.
The coin ignored concerns about rising Covid-19 cases and the possibility of further restrictions, as South Africa recorded more than 10,000 daily infections on Wednesday for the first time since August.
Health Minister Dr. Zweli Mkhize said the country was experiencing exponential growth in daily cases and the government would seek further restrictions to stop the spread.
Andre Botha of TreasuryONE said the rand was leading the strengthening of emerging market currencies.
Botha said that a break below R14.70 could generate more strength at R14.50 against the USD.
“Increased optimism about a Brexit trade deal and US stimulus deal before Christmas, along with the Fed’s announcement that interest rates would remain at zero and that the bond purchase program would continue until for the US economy to recover, unemployment to decline, and to meet their inflation target of 2 percent has seen an increase in risk appetite … ”Botha said.
BUSINESS REPORT
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