May 11, 2020 / 8:26 AM / 17 days ago

South Africa's rand firmer as global risk appetite continues

JOHANNESBURG, May 11 (Reuters) - South Africa’s rand firmed early on Monday alongside other emerging market currencies as more countries eased coronavirus lockdown restrictions, boosting investor appetite for riskier assets.

At 0730 GMT the rand was 0.25% firmer at 18.2850 per dollar versus a close of 18.3300 on Friday.

European countries such as Spain and France, which have been hit hard by the virus, have announced a phased easing of lockdown measures as death tolls decline. Some Asia-Pacific nations, which have a relatively smaller number of cases than European countries, are taking similar steps as well.

Risk appetite has picked up since the United States reported fewer job losses than expected on Friday, with the rand clawing back ground as investors seek value in risk assets that have hit oversold territory.

“The risk-on sentiment from Friday continues this morning as economies restarting outweigh poor economic data and the first hint of a second wave of Coronavirus cases,” said senior dealer at TreasuryONE Andre Botha in a note.

“We need to break below 18.2500 to see a possible move towards 18.0000 and then 17.7500,” he added.

With no major data releases locally or abroad the rand is seen trading in a narrow range for most of the day, while the reaction to treasury’s decision to up the amount on sale at its weekly auctions is set to be reflected in bond trading.

South Africa will increase the amount of debt on sale at its weekly auctions by nearly 2 billion rand ($109 million) to cover a budget deficit set to increase sharply due to the coronavirus stimulus package announced by President Cyril Ramaphosa in April.

In early trade yields were lower on long term government issues, with the paper due in 2030 down 4 basis points to 9.25%, back to levels last seen in early March before the pandemic struck. (Reporting by Mfuneko Toyana; Editing by Kirsten Donovan)

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