South African rand firms on weaker dollar, commodities boost
JOHANNESBURG, Aug 3 (Reuters) - South Africa's rand firmed early on Tuesday, hovering near two-week highs hit in the previous session, boosted by commodity prices and weakening of the dollar.
The rand ZAR= traded at 14.4100 against the dollar at 0612 GMT, 0.3% firmer than its previous close.
The currency rose to 14.3675 on Monday, its strongest since July 19, as rand-linked commodities such as iron ore, platinum and gold advanced. It extended gains made last week after a dovish tone from the U.S. Federal Reserve meeting.
"The rand continues to draw benefit from the weaker dollar even as numerous risks remain on the horizon," said Bianca Botes, director at Citadel Global.
The dollar was on the back foot against the safe-haven yen and Swiss franc on Tuesday, dragged by soft U.S. manufacturing data and rising concerns about the coronavirus Delta variant. USD/
"Investors are still keeping an eye on the Delta (coronavirus) variant, but some of the fears that were priced into the market appear to have dissipated," said Botes.
Market focus is also on U.S. non-farm payroll data due on Friday, an important parameter to determine the Fed's future policy stance.
Riskier currencies such as the rand thrive on U.S. rates staying low because they benefit from the interest rate differential that increases their appeal for carry trade, in which investors borrow in a low-yielding currency to invest in higher-yielding assets.
In fixed income, the yield on the benchmark 2030 government bond ZAR2030= was down a single basis point to 8.76% in early deals.
(Reporting by Olivia Kumwenda-Mtambo; Editing by Ramakrishnan M.)
((Olivia.Kumwenda@thomsonreuters.com; +27 10 346 1084;))
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