The perfect storm – commodities, politics and greenback bolster Rand

Not only are investors backing the currency on prospects that market favorite Cyril Ramaphosa may soon become the country's leader, but the ailing dollar and rising commodity prices are playing along. The rand touched its strongest level in more than two years on Dec. 28 and remained near that level on Tuesday.

The Bloomberg Commodity Index climbed to a 10-month high on Tuesday after rising for 13 consecutive days, the longest streak on record. That's bolstering the rand because raw materials including coal, iron ore, and precious and industrial metals account for more than half of the country's export earnings.

"The rand remains very much a commodity currency," said George Glynos, managing director at ETM Analytics in Johannesburg. "You can't tell where the rand is going unless you have a seriously good take on where commodity prices could go," though a number of other variables also affect the exchange rate, he said.

The rand gained 0.3 percent to 12.3463 per dollar by 2:11 p.m. in Johannesburg after climbing as much as 1 percent earlier. It has rallied more than 6 percent since Ramaphosa, who has pledged to revive the struggling economy and stamp out corruption, was elected leader of the ruling African National Congress on Dec. 18. That set the billionaire businessman on a path to take over from Jacob Zuma as the country's president.

To be sure, there are signs the rally may be nearing its end. The 14-day Relative Strength Index for the dollar versus rand has been below 30 for 11 straight days, the longest run in more than 15 years. A level below 30 is a sign to some analysts that a security may have fallen too much, too fast and is due for a rebound.