Following positive sentiment around a stronger opposition in the 2016 municipal elections, the rand-dollar exchange has hit a 9 month high.
The rand strengthened to a nine-month high against the dollar to lead global currency gains as results from South African local-government elections. The elections showed a swing toward the main opposition, according to Bloomberg and the Mail and Guardian.
The rand outperformed its peers as orderly elections for municipal leaders boosted sentiment toward South Africa.
Early counting showed the governing African National Congress trailing the Democratic Alliance in many of the major economic hubs including large parts of Gauteng and the Eastern Cape.“The election outcome seems to be supporting expectations of a change in major cities,” said Simon Quijano-Evans, emerging-market strategist at Legal & General Investment Management in London. “A wind of change is what markets have been looking for, however small it may be, given the sustained income inequality and continued drop in growth rates.” “The search for global yields is continuing and the rand has been a major benefactor of it,” said Wichard Cilliers, a trader at Treasuryone in Pretoria. “South Africa is a very liquid currency, the election is going smoothly too, that’s all benefiting the rand.”The rand advanced 1.3 percent to 13.7310 against the dollar, its strongest since November 4 and the best performance among global currencies, by 2:01pm in Johannesburg. The rand also led gains against the euro and the British pound, gaining 2.5 percent to 18.0892.