LONDON, April 28 Reuters The rand has emerged as an unlikely winner among emerging market currencies since the COVID19 pandemic swept the globe, despite South Africas high levels of debt and unemployment.

U.S. sanctions have rumbled Russian bond markets, Turkish assets have been hit by monetary policy concerns and other big developing countries such as India and Brazil have taken a hard hit from the coronavirus crisis.

The rand has been trading very, very well, like a safe haven almost, within the highyield 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 some 30 over the past 12 months, while an index of emerging market currencies is down around 2.

And randdenominated government bonds have delivered handsome returns despite this years hefty rise in U.S. Treasury yields, which roiled other emerging markets.

South Africa offers some of the highest real yields in major emerging markets, with 10year government bonds yielding just over 9 with inflation at 3.2 yearonyear .

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 South Africa as the default option if you want to invest in a big, liquid market that has yield, Lord added.

Morgan Stanley calculations show that South African bonds grew to 1.8 overweight the largest in the index by the end of March….