South African Rand Gains Most Among Global Currencies After Yellen’s Comments

South Africa’s currency, the Rand gained the most against the dollar among global currencies and headed for its first quarterly gain since 2012 as dovish comments from Federal Reserve Chair Janet Yellen sparked a shift toward riskier assets, Bloomberg reports.

The currency advanced as much as 2.4 percent to the strongest level on a closing basis since Dec. 8, a day before President Jacob Zuma fired his then finance minister, Nhlanhla Nene, sending the Rand tumbling. Local stocks ended 1.4 percent higher, the biggest gain in more than two weeks, while yields on government Rand-denominated debt due in 2026 fell 19 basis points to 9.16 percent, the lowest since March 17.

The Rand’s gains on Wednesday, the best among 31 major and emerging-market currencies tracked by Bloomberg, cut bets the South Africa Reserve Bank will raise borrowing costs to slow price growth and meet its inflation target. “Further appreciation may be limited and the Rand is unlikely to be able to sustain current levels,” say Ion de Vleeschauwer, chief dealer at Bidvest Bank.

The South African unit extended gains in late afternoon trade in Johannesburg as Finance Minister Pravin Gordhan said he would cooperate with a police investigation into an alleged rogue unit set up within the revenue service when he was in change, easing fears of a confrontation.
Gordhan was given a deadline by the police’s Hawks unit to answer questions by Wednesday. In a statement, he said the revenue unit was legal and that he was responding to the police in the public interest, even though he was not legally obliged to do so.

The currency’s advance against dollar took its gain since the start of the year to 4 percent, with the unit set for its first positive quarter since March 2012. Against the pound, the rand rallied 2 percent to 21.4323, its strongest level since Feb. 23 on a closing basis.