South Africa’s rand gained more than 2 percent yesterday, bouncing off a two-year low struck a day before, when investors dumped emerging market assets because of fears over the Turkish economy.
At 0705 GMT, the rand traded at 14.0800 versus the dollar, around 2.3 percent stronger on the day and more than 11 percent stronger than its weakest on Monday.
Government bonds also rose, as the yield on the benchmark government bond maturing in 2026 fell 11 basis points to 8.94 percent.
The rand, one of the most traded emerging market currencies worldwide, is highly susceptible to swings in sentiment on global markets.
On Monday it was rattled by a plummeting Turkish lira, which has been dragged lower by worries over President Tayyip Erdogan’s calls for lower interest rates and worsening ties with the United States.
“I don’t think this volatility is going to stop just yet,” said Warrick Butler, executive head of rand trading at Standard Bank.
“If sanity returns in some small way, then there is a very good chance that we will trade back below 14.0000 (to the dollar), but don’t hold your breath.