June 24, 2019 / 7:49 AM / a month ago

South Africa's rand stretches gains as Fed, ECB turn dovish

South African rand coins are seen in this photo illustration taken September 9, 2015. REUTERS/Mike Hutchings

JOHANNESBURG (Reuters) - South Africa’s rand firmed early on Monday, adding to the previous session’s gains as sentiment toward emerging markets overall was soothed by softening interest rate outlooks in the United States and Eurozone.

At 0630 GMT the rand was 0.37% firmer at 14.2675 per dollar compared to Friday’s close of 14.3200.

The rand has gained more than 3.6% since last Monday, hurdling key technical resistance levels on its way to a 5-week best as the greenback was dragged down after the Federal Reserve last week opened the door for a potential rate cut as early as next month.

The European Central Bank also looks set to continue its stimulus programme.

On Friday ECB President Mario Draghi repeated a dovish monetary policy message to European Union leaders, saying that any deterioration in economic conditions would trigger additional stimulus from the bank.

A Reuters poll on Friday sees South Africa’s Reserve Bank cutting interest rates next month or in September to boost economic growth after a deep first quarter contraction.

Bonds also gained, with the yield on the benchmark government bond due in 2026 down 2 basis points to 8.1%.

Reporting by Mfuneko Toyana; Editing by Raissa Kasolowsky

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