Rand climbs as weak US data weighs on dollar

Johannesburg - The rand gained as much as 1.4% against the dollar on Wednesday, after weaker-than-expected US data led investors to scale back their expectations of when the Federal Reserve will start hiking interest rates.

The rand reached a session high of R11.9615/$, its firmest since last Friday, making it the third strongest performer in a basket of 25 emerging market currencies tracked by Reuters after the Russian rouble and the Brazilian real.

By 17:27 GMT, the local unit was up 1.36% at R11.9670/$ compared with Tuesday's close at R12.1325/$.

"We had some fairly weak data out of the US and this is just guys squaring out of (dollar) positions before (US) non-farm payrolls on Friday," Investec trader David Gracey said.

READ: US stocks slide after weak ADP jobs report

The dollar fell against major currencies as disappointing data on US manufacturing and jobs growth raised bets the Fed might refrain from raising interest rates until late 2015 at the earliest.

South African government bonds mirrored the stronger rand, and the yield on the benchmark 2026 government bond fell 9 basis points to 7.725%.