The rand has strengthened 2.4% this year and soared over the past 12 months, while an index of emerging market currencies is down about 2%. File imageThe rand has emerged as an unlikely winner among emerging market currencies since the Covid-19 pandemic swept the globe, despite SA's high levels of debt and unemployment.
“The rand has been trading very, very well, like a safe haven almost, within the high-yield part of the index,” James Lord, global head of FXEM strategy at Morgan Stanley, said. And rand-denominated government bonds have delivered handsome returns, despite this year's hefty rise in US Treasury yields, which roiled other emerging markets.
“Russia and Turkey obviously have huge amounts of domestic risk ... and people are a little bit hesitant to get too involved in these markets, which leaves SA as the default option if you want to invest in a big, liquid market that has yield,” Lord added.