Johannesburg - The rand gained against the dollar early on Tuesday and could continue to benefit from investors culling their long dollar positions after a recent heavy sell-off.
The JSE's Top 40 futures index was up 1.1%, suggesting the local bourse would open more than 470 points higher.
At 08:55 the rand was at R16.7400/$, up 0.65% from Tuesday's close at 16.8500.
"There does seem to be an overhang of long dollar positions," Standard Bank trader Warrick Butler said. "On a short-term basis there is minor trend line support around 16.6800."
The local currency has fallen more than 8% against the dollar this year, weighed down by concerns over the outlook for the sickly local economy as well as slowing growth in China, a key importer of South African commodities.
Despite the lethargy in the South African economy, traders and analysts are pricing in the chance of a 25- or 50-basis point rate hike when the Reserve Bank holds its first policy meeting of the year next week, against the backdrop of rising inflation.
In fixed income, the yield for the benchmark government instrument due in 2026 was down 6 basis points at 9.77% in early trade.
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