JOHANNESBURG: South Africa's rand firmed on Tuesday alongside other emerging market currencies, helped by higher commodity prices and a pause in the rise of the dollar.
Stocks also rose in line with emerging markets led by investors buying back into over sold retail and banking shares.
At 1500 GMT, the rand traded at 14.1300 per dollar, 0.56 percent firmer from its New York close on Monday. "Pressure on the rand has lessened as medium and long-term US treasury yields have eased and as the dollar has backed off from its highs," Rand Merchant Bank analyst John Cairns said in a note.
Expectations of inflation stemming from President-elect Donald Trump's future fiscal policies have fed through to US bond yields and pushed the dollar to near 14-year highs. That in turn has weighed heavily on emerging markets.
Locally, focus was on the South African Reserve Bank interest rates decision on Thursday.
Economists polled by Reuters expect the central bank to hold its repo rate at 7 percent even though the Federal Reserve is expected to raise US interest rates in December, which could weaken the rand.
On the bourse, the benchmark Top-40 index rose 0.92 percent to 44,575 points while the All-Share index gained 1.03 percent to 51,117 points.
Retailers strengthened 3.09 percent and banking shares gained 2.88 percent, leading gains on the bourse as investor flows returned to over sold shares after pricing in South Africa's ability to avoid a possible ratings downgrade to sub-investment next month.
"People are coming to a point were they think we won't be downgraded in December so that has brought some of the investors back into the market," said Cratos Capital equities trader Greg Davies.
Wholesale and retail group Massmart rose 5.12 percent to 114.04 rand, fashion retailer The Foschini Group gained 5.77 percent to 143.99 rand and banker FirstRand gained 3.55 percent to 52.15 rand.
Trading was slightly below average, with a total of 259 million shares changing hands compared with last year's daily average of 296 million. On the bond market, government bonds also firmed, with the yield for the benchmark instrument due in 2026 down 1 basis point to 8.965 percent.
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