World Markets

South African rand steady, focus on U.S. stimulus talks

Credit: REUTERS/THOMAS WHITE

South Africa's rand steadied in early trade on Friday but was on track to clock weekly gains as optimism about a new stimulus package in the United States boosted risk taking.

Adds latest prices, analyst comments

JOHANNESBURG, Oct 23 (Reuters) - South Africa's rand steadied in early trade on Friday but was on track to clock weekly gains as optimism about a new stimulus package in the United States boosted risk taking.

At 1700 GMT, the rand ZAR=D3 traded at 16.2200 versus the U.S. dollar, 0.09% firmer and not far off its previous close of 16.2350.

The currency, which rallied to its best in a month on Thursday, looked set for weekly gains of more than 1.5%.

Hopes for a new U.S. novel coronavirus relief package ahead of the Nov. 3 presidential election remain up in the air, but optimism that the stimulus discussions will soon be concluded has kept high yielding currencies bid with investors scouring the global market for returns.

"The short-term technical indicators suggest the possibility of an attempt on the 16.000 level at some point, although there is likely to be some position squaring going into the weekend," said analysts at Nedbank.

Local focus is on the medium term budget speech due on Wednesday, when the extent of South Africa's fiscal problems should become clearer.

A Reuters poll showed that the country's consolidated fiscal deficit was set to widen further than projected in June's emergency COVID-19 budget as a third-quarter rebound in economic growth will not boost tax receipts enough.

On the bourse, stocks gained as global markets were boosted by optimism that a deal can be reached on a fresh U.S. coronavirus relief package.

The benchmark Top-40 .JTOPI index closed 0.83% firmer at 50,692 points and the All-Share index .JALSH rose 0.99% to 55,339 points.

"The market is waiting for the stimulus package from the U.S. The longer it waits for the stimulus, the more uncertainty (there) is in gold and platinum prices," said Greg Davies, trader at Cratos Capital.

Amongst the decliners were gold shares .JGLDX, which fell 2.24%, as spot gold eased.

(Reporting by Mfuneko Toyana and Tumelo Modiba; Editing by Ken Ferris)

((mfuneko.toyana@thomsonreuters.com; +27117753153; Reuters Messaging: mfuneko.toyana.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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