The South African rand began the week on a firmer footing in early trade on Monday, supported mainly by a rebound in gold and platinum prices, which helped lift sentiment toward the commodity-linked currency.
At 0638 GMT, the rand traded at 15.97 to the dollar, about 0.5 percent stronger than its close on Friday.
“Gold and platinum prices have recovered from their recent lows, offering some comfort that the rand could benefit from renewed commodity price support in the week ahead,” ETM Analytics said in a research note.
The U.S. dollar was last trading around 0.2 percent weaker against a basket of major currencies, providing additional support for emerging market units. Gold, one of South Africa’s key exports, was trading just above the US$5,000-per-ounce level, as investors positioned ahead of key U.S. jobs and inflation data later in the week that could offer fresh clues on the future path of U.S. interest rates.
Market participants are closely watching global monetary policy signals, with expectations around when the U.S. Federal Reserve may begin cutting rates continuing to influence risk appetite and capital flows into emerging markets such as South Africa.
On the domestic front, attention this week will focus on an annual global mining conference in Cape Town, running from February 9 to 12. The event is expected to draw leading mining executives, investors and government officials from around the world to discuss industry trends, investment prospects and policy challenges facing the sector.
South Africa’s statistics agency is also scheduled to release December mining and manufacturing production data on Thursday, which could provide further insight into the health of the country’s resource and industrial sectors.
“For now, South Africa’s terms of trade remain favourable, and the outlook for the rand is similarly constructive, particularly if foreign investors continue to price in a lower risk profile,” ETM Analytics said.
In the bond market, South Africa’s benchmark 2035 government bond was firmer in early deals, with the yield down 2 basis points at 8.035 percent, reflecting modest demand for local debt as global risk sentiment improved.
