Johannesburg - The rand advanced to the strongest in almost six weeks, leading global gains against the dollar on speculation South Africa may avert a debt downgrade this year after prosecutors dropped fraud charges against Finance Minister Pravin Gordhan.
The currency strengthened as much as 2.4% and was up 2.1% at 13.5550 per dollar by 15:36 GMT in Johannesburg, set for the highest close since September 27. The rand gained most among 31 major and emerging-market currencies against the dollar and headed for a second consecutive monthly advance. Bond yields fell to the lowest in three weeks and an index of bank stocks climbed the most in more than seven months.
South Africa’s markets were rocked last month after the National Prosecuting Authority summoned Gordhan to appear in court on November 2 on fraud charges the finance minister, who is embroiled in a feud with President Jacob Zuma, described as politically motivated. NPA head Shaun Abrahams said on Monday in the capital, Pretoria, that he had withdrawn the charges after reviewing evidence and representations. Rating companies have cited heightened political risks as credit-negative. The rand strengthened further after better-than-expected trade numbers.