By JOHANNESBURG (Reuters) – The South African rand was stronger in early trade on Tuesday, buoyed by global precious metals prices and its appeal for carry trade.
At 0803 GMT, the rand traded at 17.5425 against the dollar, about 0.4% stronger than its closing level on Monday.
ETM Analytics said in a research note that a rise in domestic bond yields should ensure the rand retains its ability to attract portfolio inflows.
“Another factor worth considering is the performance of the gold price … versus an oil price, which remains more subdued to ensure that SA’s terms of trade remain supportive,” it added.
Gold prices hovered near a record high on Tuesday, while platinum also rose. Those precious metals are key South African exports.
Early on Tuesday, central bank data showed a leading business cycle indicator fell 0.7% in August, erasing the previous month’s increase.
While there has been a pickup in business confidence since the formation of a coalition government in June and strength in retail sales recently, other sectors like mining remain in a slump.
Later in the day a summit of the BRICS group of emerging economies kicks off in Russia with South African President Cyril Ramaphosa in attendance.
Ramaphosa will have a bilateral meeting with Russian President Vladimir Putin.