South Africa’s rand recovers as budget risk draws nearer

South Africa’s rand traded firmer recently, recovering alongside fellow emerging markets currencies flattened in the previous session as investors worried about the rapid spread of the coronavirus outside of China.

The economists at ETM Analytics said in a note that it was not surprising to see the rand under pressure at the start of the week especially as Wednesday’s risk event draws closer.

South Africa’s idiosyncratic risks have weighed heavily on investor sentiment. In particular debilitating nationwide power cuts, an unsustainable debt trajectory and a lack of evidence that there’s political will to implement the economic reforms.

Traders said the recovery in the rand and other emerging market currencies was due to profit-taking after the U.S. dollar marched higher as investors rushed for safe-havens and positioning for further falls after the budget speech.

Stocks which recorded their largest one-day fall in more than a decade, opened higher with the Top-40 index up 1.3% to 49,942 points.

Bonds opened firmer with the yield on the benchmark 2026 government issue down 2 basis points to 8.815%.