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South African rand soars as unity government solidifies

The South African rand has been making significant gains in early trade, buoyed by the confirmation of unity government members last week and ahead of key talks by U.S. Federal Reserve officials.

At 0641 GMT, the rand was trading at 18.2350 against the dollar, marking a 0.15% increase from its previous close.

The formation of a government of national unity, with five political parties coming together after the ANC lost its majority in the recent election, has been well-received by investors.

President Cyril Ramaphosa’s re-election has also provided a sense of stability and optimism for the country’s economic future.

Market analysts at Rand Merchant Bank have highlighted that investors are particularly pleased with the government’s commitment to accelerating infrastructure and other reforms that will help boost the economy, which has been grappling with low growth and high unemployment for years.

Traders are eagerly awaiting insights from Fed officials on the future interest rate trajectory of the U.S. economy, as global factors often influence the performance of emerging market currencies like the rand.

The South African benchmark 2030 government bond has also shown strength in early trading, with the yield dipping by 3 basis points to 10.095%.

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