JOHANNESBURG: South Africa's rand rallied as much as 1.5 percent against the dollar on Thursday, in line with other high-yield currencies, on expectations of further quantitative easing for the US unit.
Government bonds followed suit, pushing the yield on three-year paper 4.5 basis points lower to 6.7 percent. The yield for the 15-year issue was down three basis points at 8.455 percent at the close.
The rand touched a session high of 7.8825 to the dollar before retreating to 7.9016 by 1625 GMT, still up 1.29 percent compared with Wednesday's close at 8.0050.
The rand was boosted on Thursday by revived appetite for riskier assets and emerging markets along with an extensive recovery in the euro, said forex trader William Van Rijn, who runs the spot desk at Nedbank.
"A breach of the previous tops over the past few days at 1.3150 (for euro/dollar) has triggered a few stop losses in that currency pair and there was some neutralising of long dollar positions against the rand as well," Van Rijn said.
"A breach of the short-term support in the rand between 7.90 and 7.93 has assisted the local currency," he added.
The rand was the top performer among 20 emerging market currencies monitored by Reuters, ahead of the Hungarian forint and Poland's zloty.
Markets are keeping an eye on the likely extent in coming months of China's demand for commodity exports, which tends to influence the rand given South Africa's position as a major resource producer.
"Focus is on China's GDP print tomorrow and disappointment (from the data) may limit the dollar/rand pullback," said Anisha Arora, an emerging markets analyst at 4Cast.
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