South African rand firms as gold rallies
JOHANNESBURG, April 22 (Reuters) - The South African rand jumped on Tuesday as gold prices rose after U.S. President Donald Trump criticised Federal Reserve Chair Jerome Powell, rattling markets and boosting demand for the safe-haven asset.
At 1400 GMT the rand traded at 18.6025 against the dollar , about 0.8% stronger than its close on Monday, after peaking about 1% higher.
"The South African rand is gaining support from several factors, including surging gold prices and increased pressure on the U.S. dollar following Donald Trump's remarks about the Federal Reserve," said Zain Vawda, market analyst at MarketPulse by OANDA.
The rand is often supported by surges in prices of the gold and mineral exports that South Africa's economy relies on.
But it has also been undermined in recent months by political disputes between the two biggest parties in the Government of National Unity (GNU) - the African National Congress and the Democratic Alliance (DA) - over a proposed increase to value-added tax on May 1.
The DA and other smaller parties have publicly rejected the proposal and filed a court case challenging the legality of the budget process. The case was heard on Tuesday.
"South Africa's recent VAT hike, while impacting the GNU, has been interpreted positively by markets," Vawda said.
South Africa's composite leading business cycle indicator fell 0.2% month-on-month in February, central bank data showed.
On the Johannesburg Stock Exchange, the blue-chip Top-40 index was up about 0.3%.
South Africa's benchmark 2030 government bond was little changed, with the yield down 0.5 basis point at 9.165%.
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