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South Africa’s rand flat, set for weekly gains on recovery optimism

JOHANNESBURG, Nov 27South Africa’s rand was flat in early trade on Friday, but it was on course to end the week higher, buoyed by earlier momentum from positive developments around a COVID-19 vaccine that boosted hopes of a swift global economic recovery.

At 0519 GMT, the rand ZAR=D3 traded at 15.2050 against the U.S. dollar, 0.03% higher than its New York close on Thursday, when it lost some gains as investors turned their attention back to the grim outlook for the local economy.

The currency has risen 1.44% this week, building on gains from growing global risk appetite.

Optimism around progress towards vaccines against the coronavirus and the outcome of the U.S. presidential election supported the rand, even as the country’s sovereign ratings were downgraded further into “junk” territory.

On Friday, this optimism began to stall amid doubts about the effectiveness and distribution of the vaccine, high hospitalisations in places like the United States and concerns around the economic effects of fresh lockdowns.

The rand, however, still looked set to end the week on firm footing, Peregrine Treasury Solutions said in a note, as some global factors, such as Chinese industrial profits, beat expectations and cheered investors.

“The dollar faces a weekly decline as risk appetite continues to improve, even amidst a global jump in COVID-19 cases,” it said.

The rand has gained some 7% against the dollar this month, as the greenback has been hurt by the uptick in global risk appetite.

Government bonds fell slightly, with the yield on the instrument due in 2030 ZAR2030= rising by 5 basis points to 8.895%.

(Reporting by Emma Rumney; Editing by Rashmi Aich)

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