South African rand extends gains as US Treasury yields fall

JOHANNESBURG (Reuters) -The South African rand extended gains on Friday as U.S. Treasury yields fell and data out of the U.S. showed fewer than expected jobs had been created in October, boosting hopes the Federal Reserve is done raising interest rates.

At 1513 GMT, the rand traded at 18.2475 against the dollar, about 1% stronger than its previous close.

The dollar last traded around 0.95% weaker against a basket of global currencies.

U.S. Treasury yields extended losses this week after the Fed held off on an interest rate hike on Wednesday and non-farm payrolls increased by less than expected in October, said Danny Greeff, co-head of Africa at ETM Analytics.

Like other risk-sensitive currencies, the rand often takes cues from global factors like U.S. monetary policy.

“Given how overvalued the USD is, the prospect of rate cuts in the coming quarters could trigger a deeper correction through the months ahead, and the ZAR is poised to capitalise,” Greeff added.

Locally, South African private sector activity fell in October after holding steady in September, hurt by weak customer demand and high fuel prices, a survey showed on Friday.

On the Johannesburg Stock Exchange, the blue-chip Top-40 index closed up 2.26%, while the broader all-share index ended 2.06% higher.

South Africa’s benchmark 2030 government bond was stronger, the yield down 7 basis points to 10.295%.

(Reporting by Tannur AndersEditing by Alexander Winning, Bhargav Acharya and Alison Williams)