South African Rand Firms to 10-month High a Week Before Election

By Reuters

May 21, 202412:24 PM EDT

South African Rand coins are seen in this illustration picture

South African Rand coins are seen in this illustration picture taken October 28, 2020. REUTERS/Mike Hutchings/Illustration/File Photo Purchase Licensing Rights, opens new tab

JOHANNESBURG, May 21 (Reuters) - The South African rand strengthened to a 10-month high on Tuesday, a week before a general election, with analysts citing rising expectations that the outcome of the vote was unlikely to disrupt markets.

At 1601 GMT, the rand traded at 18.0750 against the dollar , 0.62% stronger than its previous close. It earlier firmed to 18.0300, a level not seen since August last year.

The dollar index was last trading around 0.05% stronger against a basket of global currencies.

A tracking poll by think-tank Social Research Foundation showed support for South Africa's governing African National Congress has risen in the weeks leading up to the May 29 election, suggesting it may only need a small coalition partner or could even win a majority.

"There is little doubt that the global environment has played a role, but the market's positive mood vis-a-vis the ZAR seems to be due mostly to the optimism around a market-friendly election outcome," said HSBC in a research note.

Earlier on Tuesday, data from the central bank showed South Africa's composite leading business cycle indicator fell 1.9% month-on-month in March.

The indicator collects data on business confidence, money supply and other factors and hints at the outlook for the economy.

On the stock market, the Top-40 (.JTOPI), opens new tab index closed 0.4% lower.

South Africa's benchmark 2030 government bond was stronger, with the yield down 3 basis points to 10.270%.