South Africa just got good news in triplicate. Yet the rand, the world’s most volatile currency, barely budged.
In the space of seven minutes, traders had to digest data showing the economy grew a better-than-forecast 2 percent quarter-on-quarter, between July and September, an almost 10 percent jump in the trade surplus in the period to 71 billion rand ($5.3 billion) and a 3.3 billion-rand domestic bond auction at which investors bid for more than double the amount of debt offered, Bloomberg reports.
But the rand was relatively unfazed, trading just 0.1 percent stronger at 13.5049 per dollar by 3:27 p.m. in Johannesburg. And the yield on the government’s local-currency bonds due December 2026, which was down about six basis points when the data was released, fell two more basis points to 9.16 percent.
It’s a sign that investors don’t care so much for economics right now, as they do for politics, focusing more on the ruling African National Congress’s Dec. 16-20 conference, when it will choose a new party leader to replace President Jacob Zuma.
Deputy President Cyril Ramaphosa, seen as the candidate favored by investors, has built a lead over his main rival, Nkosazana Dlamini-Zuma, helping the rand rebound since it hit this year’s low on Nov. 13 by more than 7 percent. That’s the best performance in emerging markets during the period.
“The currency and South African government bonds have been on a good run over the last week on easing political risk, and this remains the key driver,” said Christopher Shiells, an analyst at Informa Global Markets in London.