South African rand extends gains versus weak dollar

PUBLISHED: Fri, 21 Aug 2020 11:23:04 GMT

JOHANNESBURG (Reuters) – South Africa’s rand extended its recent gains on Friday as the dollar was on the defensive on worries about the health of the U.S. economy.

At 0625 GMT, the rand was trading at 17.2200 to the dollar, more than 0.2% stronger than its previous close and on course for gains of around 1% this week.

In the absence of major domestic data releases the rand has moved mainly on global factors this week.

A further easing of the country’s coronavirus lockdown and three days of planned power cuts by ailing state utility Eskom had relatively little market impact.

A Reuters poll released on Friday predicted that Africa’s most industrialised economy would contract by 8.0% this year, a slightly more pessimistic view than official projections.

With the outlook bleak, the South African Reserve Bank is seen keeping interest rates at their current level of 3.50% for much longer than previously thought.

Government bonds were a shade weaker in early deals on Friday, with the yield on the 2030 instrument up 2.5 basis points to 9.30%.

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