South Africa's rand firmer, eyes on British referendum

by Reuters 0

South Africa’s rand extended gains against the dollar in early trade on Thursday as cautious optimism that British voters would opt to stay in the European Union in the session helped risk appetite.

At 0635 GMT, the rand traded at 14.5920 per dollar, 0.2 percent firmer from its New York close on Wednesday. The currency is trading at its strongest levels against the dollar since May 3, according to Thomson Reuters data.

Focus was on the British referendum, with latest opinion polls before voting began favouring Britain remaining in the EU, buoying appetite for riskier but high-yielding assets globally.

But a wait-and-see mood was expected to prevail through the rest of the day, dotted by bouts of volatility as markets nervously awaited the poll results.

“Markets are expecting a ‘remain’ but further rand gains are possible even so,” Rand Merchant Bank analyst John Cairns said in a note.

“Unofficial exit polls will be available through today. These could cause some nervy, jumpy trade this afternoon but global markets are likely to be illiquid and in wait-and-see mode.”

Stocks were set to open flat at 0700 GMT, with the JSE securities exchange’s Top-40 futures index down 0.13 percent.

In fixed income, the yield for the benchmark instrument due in 2026 was up 3 basis points to 8.9 percent.