South Africa’s rand reversed losses against the dollar in early trade on Tuesday after touching a record low in the previous session as the greenback retreated from a 13-year peak.
The JSE securities exchange’s Top-40 futures index was up 0.57 percent, indicating that the actual stock index would open more than 260 points higher at 0700 GMT.
By 0651 GMT the rand inched up 0.24 percent to 14.4145 versus the dollar, from a record low of 14.4940 touched on Monday, knocked back largely by a widening trade deficit and a gloomy review by the central bank.
A retreating dollar from multi-year peak boosted the rand slightly as traders bought back the euro after suffering the worst drop in eight months.
“While local factors have dominated the headlines, euro against the dollar has also been playing a major role in the rand,” Rand Merchant Bank currency strategist John Cairns said.
“Volatile moves are feeding directly into the rand and it was noticeable that the worst on the rand corresponded with the worse on the euro,” Cairns said.
Selling the euro against the dollar has been one of the most crowded trades since European Central Bank President Mario Draghi signalled in October that the central bank will unleash another stimulus at its policy meeting this Thursday.
The better-than-expected Caixin/Markit China Manufacturing Purchasing Managers’ Index(PMI), fuelling hopes that the economy may be slowly levelling out, also helped the rand strengthen early in the local session ahead of U.S. ISM manufacturing data.
On the fixed-income market, yields on government bonds rose, with the benchmark issue due in 2026 adding 1.5 basis point to 8.590 percent.