Johannesburg - South Africa's rand climbed as much as 0.9 percent against the dollar on Monday as investors applauded the appointment of respected technocrat Lesetja Kganyago to succeed Gill Marcus as central bank governor.
Kganyago, who has served as deputy governor, said the bank's primary objective was to protect the value of the rand to support balanced and sustainable economic growth, as well as keeping the financial system stable and inflation under control.
The rand rallied to a session high of 11.2300 after President Jacob Zuma announced his appointment, and was trading at 11.2580 by 17:28 SA time, up 0.7 percent from Friday's close in New York.
The benchmark government bond due in 2026 also edged higher, pushing the yield 1 basis point lower to 8.265 percent.
“(Kganyago's appointment) is a choice the market had positioned itself for,” Tradition Analytics said in a note.
“The relief rally seen on the rand ... shows that the decision will generally be well received, if for no other reason that the fact that further continuity will be enhanced.”
Kganyago, a former Treasury director-general who kept a grip on fiscal spending, is as well-regarded as Marcus in financial markets, and could have greater success in selling monetary policy decisions to government departments, analysts said.
At an investment summit last week, Kganyago, who has long been seen as a policy hawk, said the central bank should keep its focus on taming inflation, comments that suggested rates would be more likely to rise than stay unchanged.
This would boost the rand's yield appeal among investors, particularly as global markets brace for policy tightening in the United States. - Reuters