South Africa's rand firmer in yield hunt
Adds latest prices, analyst quote
JOHANNESBURG, July 17 (Reuters) - South Africa's rand firmed on Friday to end the week on the front foot as demand for riskier assets was given a boost by hopes a European Union summit will make progress on a recovery fund that could help lift global growth.
At 1515 GMT, the rand ZAR=D3 was 0.55% firmer at 16.6475 per dollar, after a cautious start as a rise in coronavirus infections locally and elsewhere weighs on hopes for a quick economic recovery.
Sentiment had also been held back by renewed tensions between Washington and Beijing, but hopes the EU summit will agree the details of a recovery fund spurred some buying.
South Africa's central bank decides on interest rate policy next Thursday, and is expected to make another 25 basis point (bp) reduction on top of the 275 bps worth of cuts since January.
The likelihood of a rate cut prompted some investors to buy the rand and pocket the still high yield on the currency before it potentially falls next week, but analysts said buying was unlikely to last with the local economy under severe strain.
"Economic fundamentals from South Africa over the past few weeks have been nothing to celebrate thanks to deep wounds inflicted from lockdown restrictions," said Lukman Otunuga, senior analyst at FXTM.
"However the rand, which remains a proxy for EM (emerging market) risk continues to find ample support from vaccine hopes and expectations of further stimulus for pandemic-hot economies."
The Johannesburg Stock Exchange (JSE) closed the week on a high, with the FTSE/JSE All Share Index .JALSH up 0.33% to 55,912 points, while the FTSE/JSE Top 40 Companies Index climbed 0.3% to end at 51,516 points.
Bonds were weaker, with the yield on the benchmark 2030 government issue ZAR2030= up 6 basis points to 9.41%.
(Reporting by Mfuneko Toyana, editing by Larry King and Mark Potter)
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