In the context of rising US-China tensions over security legislation in Hong Kong, along with a deteriorating economic picture in South Africa, the timing of the rand\u2019s rebound \u201chas been a bit surprising,\u201d said Per Hammarlund, chief emerging markets strategist at SEB AB in Stockholm.<\/p>\n Still, \u201cgiven that the rand and most other emerging-market currencies have some way to go before being back at levels from before the Covid-19 outbreak, the rally has enough legs to last through the end of the second quarter,\u201d he said.<\/p>\n The rand has strengthened 5.6% in May, it\u2019s first monthly advance this year and the best since January 2019. On the way, it breached two key resistance levels to further gains: the 50-day moving average at around R18.20 and the 23.6% Fibonacci retracement from April\u2019s record low, at R18.04.<\/p>\n Next up is the 38.2 retracement at R17.24, and a sustained breach could see the currency heading toward R16.50 per dollar, according to Credit Suisse SA and Standard Bank Group Ltd.<\/p>\n While a tentative return of risk appetite worldwide contributed to the rand\u2019s advance, the currency also received some support from a relatively hawkish central bank.<\/p>\n The regulator on May 21 curbed expectations for further aggressive easing after cutting its benchmark interest rate for the fourth time in as many months in a bid to support an economy forecast to slump deeper into recession.<\/p>\n Also bolstering the currency were signs that record outflows from South Africa\u2019s domestic bond market may be coming to an end. Foreign investors started trickling back into local debt in the second half of May, after selling a net R66 billion ($3.8 billion) this year.<\/p>\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2020\/05\/Bloomberg12.png\")
<\/a><\/p>\n