South Africa\u2019s rand traded below 12 per dollar on Wednesday for the first time since May 2015, extending a rally sparked by an improving domestic political environment and supported by global risk-on sentiment and the greenback\u2019s retreat.<\/p>\n
The currency advanced 0.5% to R11.97 per dollar by 10h45 in Johannesburg, bringing gains in the past three months to 15%, the most out of 31 major currencies tracked by Bloomberg.<\/p>\n
The yield on rand-denominated government bonds due December 2026 fell four basis points to 8.32%, the lowest since March.<\/p>\n
The election of Cyril Ramaphosa as head of the ruling African National Congress in December, setting him on a path to take over from President Jacob Zuma, has fueled optimism South Africa may avert further credit-rating downgrades as the new leadership takes steps to root out corruption and stimulate the ailing economy. Inflows into the nation\u2019s stocks market are running at\u00a0record\u00a0levels.<\/p>\n
\u201cInvestors are loving us at the moment,\u201d said Phillip Pearce, a trader at TreasuryOne Ltd in Johannesburg.<\/p>\n
\u201cThe dollar is taking a pounding and global markets are still on the hunt for yield. There\u2019s not a lot of risk going now. South Africa seems like a good bet.\u201d<\/p>\n
The rand could appreciate to as low as 11.50 per dollar if Zuma is removed from office, Pearce said.<\/p>\n