South Africa’s Rand Recovers as Gordhan Takes Over


South African bank notes featuring an image of former South African President Nelson Mandela are displayed at an office in Johannesburg January 17, 2013.     REUTERS/Siphiwe Sibeko

Following the appointment of the widely respected Finance Minister, Pravin Gordhan, South Africa’s rand has recently extended its rally from the previous session, firming to well below the 15 rand mark against the dollar.
The rand gained 1.44 percent to 14.8800 per dollar, a level last seen before Nhlanhla Nene was unexpectedly fired as finance minister last Wednesday.
Benefits from sale of the greenback were also recorded as local traders sought to unwind long-dollar positions ahead of a meeting of the U.S. Federal Reserve, where its policy committee (FOMC) is expected to raise interest rates.
Chief trader at Bidvest Bank currency desk, Ion de Vleeschauwer said “The local markets definitely don’t want to run the massive risks over the holiday and the FOMC, so we’re seeing large profit-taking from long-dollar positions today”.
South African markets will be closed on Wednesday for a public holiday.
The dollar slipped to a seven-week low against a basket of currencies on Tuesday amid growing jitters over the message the Fed will seek to send on interest rates on Wednesday, buoying most emerging market currencies.
South African government-issued bonds also rallied on Tuesday, with yields across the curve falling. By 1100 GMT the yield on the benchmark 2026 issue had shed 33 basis points to 9.5 percent

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