South Africa’s rand firmed early on Tuesday, resuming last week’s rally after the previous session’s dip as investors were again lured by the currency’s higher potential return amid a calmer local and offshore backdrop.
President Cyril Ramaphosa sought to reassure investors in London on Monday, saying he was ready to push through tough economic reforms including selling a stake in state-owned carrier South African Airways (SAA).
His remarks also hinted at more openness to allowing private investors stakes in state power firm Eskom, which is set to be split into three separate entities by end-year in a bid to stem its ballooning debt, which currently tops 450 billion rand ($30.49 billion).
At 0650 GMT the rand was 0.21% firmer at 14.8040 per dollar after sliding to a close of 14.8350 on Monday in the face of some dollar demand and fears the slide in Turkey’s lira could spread to other emerging market currencies.
Turkish markets tumbled on Monday, with the lira touching its lowest in nearly four months and stocks sliding 2.3%, after U.S. President Donald Trump said he was working on “powerful” sanctions over Ankara’s offensive into Syria.
But continuing signs of a detente in the trade spat between Beijing and Washington has seen demand for emerging currencies, and the rand specifically, remain, with investors willing weighing up individual country risks and carry yield.
“The rand seems to be escaping the contagion implications, suggesting the market is still differentiating between TRY and other high yield FX, given expansionary monetary policy in key developed markets,” traders at ETM Analytics said in a note.