Rand bulls will win out over rand bears, at least for the next few weeks.

That’s the view of analysts from Credit Agricole CIB and Toronto-Dominion Bank on the back on the rand’s best day in almost two years after Moody’s Investors Service kept South Africa’s local rating investment grade. There’s little to reverse the trend before the ruling African National Congress (ANC) picks its next leader at a conference between December 16 and December 20.

“For now, risks have been priced into the market and we see the rand sticking around” current levels, said Christopher Shiells, an analyst at Informa Global Markets in London. “The outcome of the ANC conference is the key to what the rand and South African assets will do next year.”

The rand rose as much as 3.5% to R13.67 per dollar on Monday, the most on a closing basis since December 2015, before paring gains to 2.9% by the close. The yield on South Africa’s benchmark rand bonds due in December 2016 fell 11 basis points to 9.23%. On Tuesday, the rand fell 0.2% to R13.78 by 10:44 in Johannesburg.

Sell-off reversed

The rally reversed a sell-off late Friday after S&P Global Ratings cut the nation’s local-currency rating to junk, saying that the economy and public finances had deteriorated with no prospect of immediate improvement. Moody’s kept the rating at the lowest investment grade, but put it on review for downgrade and said it may make a decision after February’s scheduled budget release.

A cut by both companies to junk would have led to South Africa’s exclusion from Citigroup’s World Government Bond Index and caused as much as $14-billion of outflows, according to Bank of America.

The recovery in the rand, the world’s most volatile major currency this year, took its year-to-date carry return against the dollar to 5.3%, according to data compiled by Bloomberg. The return had been negative as recently as November 13 amid investor concern about the economy, fractures within the ANC and allegations of corruption in President Jacob Zuma’s administration.

While prices of options for dollar-rand volatility over the next week plummeted on Monday, they remain around the highest in a year for contracts maturing in one month. That suggests traders anticipate big swings when the ANC chooses who will replace Zuma as partly leader.

Markets favour a win by Deputy President Cyril Ramaphosa over Zuma’s ex-wife Nkosazana Dlamini-Zuma, the other main contender. Still, a victory by Ramaphosa won’t necessarily buoy the rand much, given South Africa’s faltering economy, according to Credit Agricole.

“We are short-term positive until mid-December, but negative in the long run because even if a new person is heading the ANC, it will not change the fundamentals,” said Guillaume Tresca, a strategist at the Paris-based lender, which forecasts the rand falling to 14.6 against the greenback by the end of 2018.

“You still have the same issues: low growth, high unemployment, large inequalities and low investment.”

Others reckon the bullishness will extend beyond the ANC conference. Toronto-Dominion says the rand may strengthen 10% to 12.55 next year if Ramaphosa or another candidate outside Zuma’s faction wins, especially if they push the president to step down as head of state before his terms ends in 2019.

“Someone alternative to the Zuma candidate may be appointed as new ANC leader and presidential candidate for the 2019 election,” said Cristian Maggio, head of emerging-markets research at the Toronto-based bank.

“This would be a major improvement in the outlook for South Africa, especially if, again as I expect, after the appointment Zuma is recalled from the presidency by the ANC.”