Equity markets moved higher while the dollar fell on Friday after tepid job US growth numbers assuaged fears of a rapid reduction in stimulus measures and a hike in interest rates.
The rand rocketed by almost 2.4% to R13.43/$ late on Friday - its best level since early February 2019. The currency has staged a strong recovery after hitting a record of R19/$ in April last year. The currency was last trading at R19.04/pound and R16.35/euro.
The US economy added 559 000 jobs in May, the second month in a row that the figures came in well below expectations.
Figures released Thursday showed a gain of nearly one million jobs on private US payrolls. Plus requests for new unemployment benefits fell below 400 000 for the first time since the pandemic began and a gauge of the crucial US services sector expanded for the 12th straight month and hit a record high.
That sparked worries that the roaring return of the US economy would push the Federal Reserve to "taper" stimulus measures and raise interest rates sooner than markets have been expecting.
But Friday's non-farm payrolls data from the Labour Department is viewed as the gold standard by the market, and equities in the US and Europe bounced higher after the numbers were released, while the dollar slumped.
"The key takeaway from the report is that it shows there is still ample room for improvement, which is apt to register in the Fed's mind as a basis for sticking with its patient-minded policy approach," said Briefing.com analyst Patrick O'Hare.
The highly accommodative monetary policies of the Fed and other central banks have been a key driver of the blockbuster rally in world equities from their April 2020 troughs.
But there have been growing concerns on trading floors that too strong a rebound in the economy will set off a boom in inflation, forcing the Fed to taper its vast bond-buying programme or even lift interest rates to prevent overheating.
The ability to earn higher US interest rates would, in turn, make South African interest rates - and the rand - less appealing to foreign investors.
CMC Markets analyst Michael Hewson said the jobs figure was "helping to support a view, that for all of the recent talk of a possible central bank retreat of support measures, that any such action was likely to be later rather than sooner."
Elsewhere, investors were wary after US president Joe Biden added to a list of Chinese firms that Americans are banned from investing in, increasing it to 59 from predecessor Donald Trump's 31.
The sanctions target companies involved in Chinese surveillance technology used to "facilitate repression or serious human rights abuses", which "undermine the security or democratic values of the United States and our allies", the White House said.
Traders were also keeping tabs on China-US relations after US President Joe Biden almost doubled the number of firms included on an investment blacklist, the latest move to show he has no intention of easing pressure on Beijing.
Attention was additionally focused on the start of a Group of Seven finance ministers meeting, with Europeans optimistic the world's wealthiest countries will support US-backed plans for a minimum global level of corporate tax.
- Additional reporting by Fin24.