Rand firmer on offshore interest after Australia rate cut
The rand recorded a second day of gains toward its firmest level in over a week against the dollar.
JOHANNESBURG - The rand recorded a second day of gains on Tuesday toward its firmest level in over a week against the dollar, as a surprise policy move by yet another central bank in the developed market increased the appeal of local assets.
By 1558 GMT the rand had firmed 0.75 percent to 11.4010 following a 1 percent gain in the previous session, breaking through the 11.4100 technical resistance level for the first time in eight days.
Australia's Reserve Bank (RBA) surprised markets when it trimmed its cash rate to an all-time low of 2.25 percent in a bid to stimulate its economy, driving its currency lower and lifting global appetite for high-yielding but riskier assets in Asian and emerging markets.
The RBA's move follows a 200 basis-point rate cut by Russia last week and a mooted cut by Turkey as the global growth outlook continues to worsen.
"The amount of investment into our domestic equity and bond market is quite astounding - and why wouldn't you," executive trader at Standard Bank Warrick Butler said in a note to clients.
Off-shore interest in local bonds continued to swell, with foreign traders buying close to R6 billion in local bonds in the past week, according to data from Johannesburg Securities Exchange.
The yield on the benchmark government issue due in 2026 however, ticked up, adding 1.5 basis points to 7.175 percent.
HSBC releases its whole economy purchasing manager's index at 0715 GMT on Wednesday, with an uptick in the number expected to further ease pressure on the rand.