Photo illustration of South African bank notes displayed next to the American dollar notes in Johannesburg

Hopes around U.S.-China trade talks bolster South African rand

JOHANNESBURG (Reuters) - South Africa's rand was firmer in early trade on Friday as hopes of progress in U.S.-China trade talks held down the dollar and boosted emerging market currencies.

At 0615 GMT, the rand was up 0.2% at 15.02 per dollar, not too far from an overnight close of 15.05.

Against a basket of currencies, the greenback was a little softer at 98.64.

Top U.S. and Chinese negotiators wrapped up a first day of trade talks on Thursday, with U.S. President Donald Trump describing the meetings as "very, very good negotiation with China". [nL3N26V3F2]

"The South African rand rode the wave of cautious optimism as markets assessed U.S.-Sino trade talk uncertainty to have lifted somewhat, although mixed signals from the economic powerhouses kept risk bulls at bay," analysts at NKC African Economics said in a note.

"Washington and Beijing may agree to a 'partial' trade deal, which lifted trade- and risk-sensitive currencies."

The rand is highly susceptible to swings in global market sentiment, as some investors use it as a proxy for emerging market risk.

In fixed income, the yield on the benchmark government bond due in 2026 dipped 2 basis points to 8.205%.

(Reporting by Nqobile Dludla; Editing by Karishma Singh)

2019-10-11 09:38:16

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