The rand has rallied to its best level since 2019 on Monday, reaching R13.98/$ as commodity prices stormed ahead.
Iron ore futures rocketed 10% earlier in Asia, with the copper price climbing another 3% to a record $10,747/ton in London amid fears that copper producers won't be able to meet increased demand for sustainable energy projects.
Copper, an efficient electrical conduit, is often used in solar and wind power structures.
Platinum, palladium and aluminium prices all saw gains, as the Bloomberg Commodity Spot Index climbed to its highest level in almost a decade. The gold price was also stronger, trading at $1,836/oz, close to its highest level since February.
The rand usually benefits from booming commodity prices, with raw materials accounting for a third of South Africa’s exports. As the world economy recovers, China continues to power ahead and the US readies massive infrastructure investments, these prices have rallied in recent weeks.
In addition, Friday’s dismal US jobs report put pressure on the dollar, benefiting the rand.
The weak employment numbers calmed fears that the US central bank will hike interest rates soon. This means the attractive interest rates offered in South Africa will continue to appeal to overseas investors, which bolstered the rand.
The rand also dodged a possible bullet after the credit rating agency Moody’s left its South African ratings unchanged, skipping a ratings review scheduled for Friday.
The local currency gained against the pound (R19.70) and the euro (R17.01) on Monday.
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