“The rand has been trading very, very well, like a safe haven almost, within the high-yield part of the index,” James Lord, global head of FXEM strategy at Morgan Stanley, said.
The South African currency has strengthened 2.4% this year and soared in the past 12 months, while an index of emerging market currencies is down about 2%.
And rand-denominated government bonds have delivered handsome returns, despite this year's hefty rise in US Treasury yields, which roiled other emerging markets.
SA offers some of the highest real yields in major emerging markets, with 10-year government bonds yielding just more than 9% with inflation at 3.2% year-on-year.
“Russia and Turkey obviously have huge amounts of domestic risk ... and people are a little bit hesitant to get too involved in these markets, which leaves SA as the default option if you want to invest in a big, liquid market that has yield,” Lord added.