South Africa's rand retreats on U.S. election uncertainty
|11/05/2020 | 03:25am|
JOHANNESBURG (Reuters) - South Africa's rand retreated early on Thursday but remained below the key technical level of 16.00 to the dollar after a rally in the previous session driven by increasing indications of a Joe Biden victory in the U.S. presidential election.
At 0700 GMT, the rand was 0.79% weaker at 15.9750 per dollar. It marched to a 8-month best of 15.8300 in the previous session in a broad emerging market rally that only lost steam overnight as traders looked ahead to the U.S. Federal Reserve policy decision due in the session.
On Wednesday, the rand had taken advantage of a sharp dip in the greenback, which slipped to multi-year lows against major currencies, as Democrat candidate Biden looked on track to edge Republican Donald Trump out of the White House.
Traders expect volatility over the next few days as vote counting continues and Trump pursues a multi-pronged attack on the vote system. The U.S. central bank is expected to keep policy rates on hold, but the added uncertainty will see some investors keeping bets light, said analysts.
"A Biden win is generally deemed to be very good for EM given the potential unwinding of the Trump protectionist approach of the past 4 years, and regardless of the SA fiscal position, yield will be sought," said chief trader at Standard Bank Warrick Butler in a note.
Bonds were firmer, with the yield on the benchmark 2030 paper down 8 basis points to 9.180%.
(Reporting by Mfuneko Toyana; editing by Barbara Lewis)