The South African rand strengthened marginally in early Tuesday trade against a resurgent U.S. dollar, though gains were capped by surging coronavirus clusters and growing criticism of the country’s COVID-19 vaccine strategy.

At 0718 GMT, the rand ZAR=D3 edged up 0.08% to 14.7150 against the dollar from an overnight close of 14.7275.

Earlier, the greenback had found support as concerns about surging COVID-19 cases and uncertainty about Senate runoffs in the U.S. state of Georgia spurred a retreat in Wall Street from record highs and rekindled demand for safer assets.

As a result, the rand clawed back some gains after swinging from black to red in Monday evening trade.

Locally, officials expect an increase of COVID-19 cases in Gauteng, which houses business hub Johannesburg, in the coming weeks, as more people return to the province following the holiday break.

This comes at a time when the country has yet to receive its first doses of coronavirus vaccines, alarming some health experts, trade unions and analysts concerned about the potential economic impact of a slow rollout.

Globally, other countries such as the UK imposed stricter lockdown, raising concerns for global economic recovery.

“Restricting movement will do economic damage, but people have learned to adapt so the damage will be proportionately less than in early 2020,” Stephen Innes, Chief Global Market Strategist at Axi said in a note.

The Johannesburg All-Share index .JALSH was trading 0.47% firmer at 0734 GMT, while the Top-40 index .JTOPI was up 0.41%.

Bonds weakened, with the yield on the benchmark 2030 government issue ZAR2030= up 2.5 basis points to 8.685%. – Reuters