Rand extends gains, stocks rally for second day

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The rand has been under pressure from shifts in investor appetite for emerging market assets as well as weak economic data pointing to a deep recession in South Africa in 2020 due to the impact of the coronavirus pandemic and a slow recovery in 2021.

JOHANNESBURG - The rand extended its gains against the dollar on Wednesday, as political wrangling over a stimulus package for the US economy halted the US currency’s rebound.

A survey showed on Wednesday that South African business confidence recovered from a 35-year low in July as global economic activity improved, but the measure remained below average. “The downside risks to rand include not only an unfavourable course of the pandemic with further waves of infection, but also renewed fears of an emerging market crisis or an escalation in US-Chinese relations.”

Higher commodity prices and increased business sentiment domestically helped the market to recoup most of its losses from earlier in the session. There were also reports in local media about a further reopening of the economy in South Africa, which gave a boost to the hospitality sector.

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