Rand's Undeserved Rally Gives South Africa Some Breathing Space

Hopes of a trade truce between China and the U.S. and a more dovish Federal Reserve are giving South Africa’s rand a boost -- and President Cyril Ramaphosa some breathing space as he struggles to stabilize the state-owned electricity company while curbing government debt levels, Bloomberg News reported. Given the outlook for South Africa’s economy -- sluggish growth, a widening fiscal deficit, and the threat of a credit-rating downgrade to junk -- the rand shouldn’t be a popular investment. To be sure, it’s on track for its worst February in more than a decade, with a 4.4 percent loss against the dollar. But it’s still up for the year, and one of the top five performers among emerging-market currencies tracked by Bloomberg. The rand’s carry appeal, a rally in commodities and the progress in trade talks have drowned out the noise around South Africa’s political and fiscal risks, according to ING Groep NV. Read more