Rand continues recovery, firm start for stocks

Johannesburg - The rand clawed back more ground against the dollar on Wednesday as the fading likelihood of a US rate increase next week boosted emerging markets.

This has seen investors pile back into emerging markets that offer higher returns but are carry more risk.

Government bonds were also stronger in early trade, while the Top 40 futures index added 1.7%, an indication that the local bourse was set to open at least 759 points firmer.

The rand traded at R13.5710/$ by 08:44, a 1.1% gain over Tuesday's close, after earlier reaching a session high of 13.5500.

Government bonds were similarly firmer, and the yield for the benchmark instrument due in 2026 fell 6.5 basis points to 8.425%.

Local assets have benefited in the last two trading days from expectations that the US Federal Reserve could push back the start of policy tightening to December and not next week as earlier anticipated.

The rand would however need to close firmer than R13.6500/$ on Wednesday to have a fair chance of pushing towards 13.4500 and 13.3000, Standard Bank trader Warrick Butler said.

"A lot will depend on global external events and those seem to have improved in terms of sentiment over the past couple of days," Butler said.