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The rand traded firmer against the dollar in early trade on Friday, as emerging market currencies continued to benefit from the rise on Turkish interest rates.
The Turkish central bank on Thursday raised the benchmark interest rate from 17.75% to 24%, which caused the lira to strengthen by 4%.
“[The bank's] policy appears to be supporting improved risk appetite at the end of the week,” said Lukman Otunuga, a research analyst at FXTM in a morning note.
Prospects for further trade talks between the US and China and a softer dollar also helped boost the rand.
The local currency opened the day at R14.77/$ and was trading at R14.72/$ at 10:07, up 0.3% on the day.
It has now made up the losses it incurred last week in the wake of the recession announcement and a sharp dip in the Turkish lira.
Bianca Botes of Peregrine Treasury Solutions said, “In the short term, we can certainly expect the rand to remain at these levels, however much downside risk still persists and the tone for the currency will be driven by our monetary policy and emerging market activity.
“On a positive note, Moody’s changed its outlook on the SA banking system from negative to stable, and maintains a stable outlook for South Africa. Importantly, the rating agency stated that the likelihood of a sovereign downgrade is subdued as long as a stable outlook can be maintained.”