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Johannesburg - The rand extended gains to a 10-day high against the dollar on Thursday, buoyed by better-than-expected domestic economic data and caught up in an emerging market rally after dovish comments from the Federal Reserve.
In a day without market-moving events, rand bulls hung on to gains from the previous session after Reserve Bank data showed South Africa's current account deficit was smaller than expected.
The dollar came under pressure after its central bank signalled that interest rates would stay low for a while, boosting emerging markets.
The rand rallied to R10.6100/$ in Thursday's session, its strongest level since June 9. It closed at R10.6610/$ in New York on Wednesday. At 14:22 GMT, the rand was up 0.2% at R10.6415/$.
"The unexpected narrowing of the current account has caused the rand to strengthen and is extremely positive for the currency over the next three months, giving the Sarb's Monetary Policy Committee far more room to manoeuvre at next month's meeting," analysts at Standard Bank said in a market note.
Dealers said the rand could now try for the 10.5560 level from 10 days ago.
Inflation data out in the previous session showed prices in Africa's largest economy outpaced expectations, shooting through the central bank's 3-6% target.
However some analysts believe the bank is not alarmed by the higher inflation, and may stay put on rates next month, instead waiting to see if the rand weakens further before tightening policy again after a 50 basis point hike in January.
Government bonds, encouraged by those views and tracking U.S. Treasuries, gained to 10-day highs, with yields down 12 basis points at 8.315% on the 2026 benchmark issue, and falling 8 basis points to 6.63% on the 2015 note.
In a day without market-moving events, rand bulls hung on to gains from the previous session after Reserve Bank data showed South Africa's current account deficit was smaller than expected.
The dollar came under pressure after its central bank signalled that interest rates would stay low for a while, boosting emerging markets.
The rand rallied to R10.6100/$ in Thursday's session, its strongest level since June 9. It closed at R10.6610/$ in New York on Wednesday. At 14:22 GMT, the rand was up 0.2% at R10.6415/$.
"The unexpected narrowing of the current account has caused the rand to strengthen and is extremely positive for the currency over the next three months, giving the Sarb's Monetary Policy Committee far more room to manoeuvre at next month's meeting," analysts at Standard Bank said in a market note.
Dealers said the rand could now try for the 10.5560 level from 10 days ago.
Inflation data out in the previous session showed prices in Africa's largest economy outpaced expectations, shooting through the central bank's 3-6% target.
However some analysts believe the bank is not alarmed by the higher inflation, and may stay put on rates next month, instead waiting to see if the rand weakens further before tightening policy again after a 50 basis point hike in January.
Government bonds, encouraged by those views and tracking U.S. Treasuries, gained to 10-day highs, with yields down 12 basis points at 8.315% on the 2026 benchmark issue, and falling 8 basis points to 6.63% on the 2015 note.
