South African rand hits 11-week peak, stocks rally



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South African rand hits 11-week peak, stocks rally

Amid a hasty retreat of the American dollar, the South African currency had rushed on to an eleven-week-peak on Friday’s FX market closure, mostly boosted up by an increase in appetite for the riskier assets following an unprecedented extent of gains in US non-farm payrolls that in effect had warded off worries of a broad-based economic slump.

On top of that, in alignment with the South African currency, the Johannesburg-listed shares had also witnessed a robust rally, as market participants appeared to be betting heavily on to a quicker-than-anticipated economic recovery following Friday’s surprise US non-farm payroll data.

In point of fact, after suffering record job losses in April, the US economy had added 2.5 million jobs last month against the Wall St. estimates of a decline of 9 million jobs in May alongside an unemployment rate of up to 20 per cent, nonetheless, in what could be contemplated as an unflagging rebound, the US economy turned a corner and had headed back to an earlier economic recovery.

Apart from that, although many analysts were quoted saying that the path towards global economic recovery could take even years, Canada had also reported a surprise job gain in May, meaning that the pandemic-led downturn might just be over, which in effect had shored up appetites for global equities including emerging market stocks and currencies.

Economic stimulus hope, surprise US job gain ramp up South African rand “buying”

Citing statistics, while the South African rand had breached its highest level since March 18th to 16.85 South African Rand per dollar on Friday’s market closure and recorded the S.

African currencies fifth straight session of gains, Johannesburg All-Share index surged as much as 2.85 per cent to 54,722, while the blue-chip Top-40 gained 2.79 per cent to 50,200, mostly buoyed up by the gains of financial and real estate stocks.

Meanwhile, referring to a flurry of stimulus package aimed at keeping the small businesses afloat amid a higher downside risk had added to hopes for the South African currency, ETM analysts wrote in a client note on Friday’s market wind down, “Technically, the 16.85 handle remains the line in the sand for the USD-ZAR, with the pair hovering around this level all morning. A sustained break below this level is likely to see a slide to 16.6500.