JOHANNESBURG – South Africa’s rand strengthened against the dollar in early trade on Tuesday, a day after the country’s currency, stocks and government bonds plunged on panic over the coronavirus pandemic.
The rand was up 0.56% at 16.6000 per dollar by 0617 GMT, having weakened 2.5% on Monday, when global markets were ravaged as the U.S. Federal Reserve’s second emergency rate cut failed to quell worries about the virus’ mounting economic toll.
Investors’ focus would be on South Africa’s central bank rates decision on Thursday.
The South African Reserve Bank is expected to cut interest rates, but the easing is likely to be less aggressive than other global central banks trying to mitigate damage from the virus outbreak, according to a Reuters poll.
“If we look at the market, I think people are taking a pause for a moment. I think the market is exhausted and is just taking stock of where we are,” said Andre Botha, currency dealer at Treasury One.
South African president Cyril Ramaphosa declared a national state of disaster on Sunday as he announced a range of measures to contain the outbreak that has infected 62 people in the country.
Investors would also look for direction from data out of the United States and Europe due later in the day.
“Finance ministers from the Eurozone will meet again today to further discuss the turmoil faced by the region in light of the rapid spread of the virus,” Bianca Botes, treasury partner at Peregrine Treasury Solutions, said in a note.
“It’s also a busy data day in the U.S. as we turn our attention to retail sales, production numbers as well as JOLTs (Job Openings and Labor Turnover Survey) job openings,” Botes added.
The rand is expected to trade in a range of 16.35 to 16.85 to the dollar, NKC African Economics said in a note.
In fixed income, the yield on the 10-year government bond was down 9 basis points at 10.655%. – Reuters Africa