Johannesburg – The rand firmed more than 1.4% against the dollar on Tuesday, on track for its first daily gain in five trading sessions, as investors responded to news that some of the thousands of striking truckers are returning to work.
Government bonds rallied with the rand and yields pulled back from multi-week highs as market players saw value in recently oversold debt, particularly at the longer end of the curve.
The rand was at 8.7460 to the dollar by 16:14 GMT, up 1.43% from Monday's close at 8.8730.
Reports that about a third of the truckers who had been on strike have agreed to suspend the action offered a reprieve for local assets, battered by concerns over the damage to Africa's biggest economy from work stoppages that began in August.
Almost 100 000 workers across South Africa, including 75 000 in the mining sector, have downed tools in often illegal and violent strikes that may hit economic growth this year.
The rand fell more than 2.3% against the dollar to a 3-1/2 year low of 8.995 on Monday as the strikes fanned volatility.
"The currency has already given up a lot of ground and a lot of bad news is consequently priced in," Standard Bank said in a note on Tuesday.
The currency remains vulnerable to a yawning current account deficit of 6.4% of GDP, it cautioned.
On the debt market, the yield on the three-year benchmark fell 5.5 basis points lower to 5.475% while that for the 14-year issue shaved off nine basis points to 7.785%.
"We're tracking the rand pretty much. Also the auction today was slightly better than expected and those two things worked in our favour and helped the market along," a bond trader in Johannesburg said.
"The yield spread between the R186 and the R157 had stretched to its widest ever at 234 points and I think some of the guys are seeing a bit of value in the long end," he added.
South Africa's Treasury sold a total of R2.1bn of its 2023, 2021 and 2031 government bonds at bid-to-cover ratios averaging 4.1.