Bond Rally Breathes New Life Into South Africa’s Currency
- Volatility at two-year low increases rand’s carry allure
- Inflows into bond market gaining momentum as foreigners return
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South Africa’s rand extended gains on Wednesday, heading for its biggest two-day advance against the dollar since July, as a rally in government bonds lured foreign investors back to the country’s debt.
The rally, sparked on Tuesday by cool US inflation data that raised optimism the Federal Reserve is getting closer to a rates pivot, may extend into the close of the year: The South African currency is more likely to end 2024 below the current level of around 18.16 per dollar than above, according to Bloomberg’s forecast model based on options pricing.