The South African rand jumped on Monday despite a pair of sovereign ratings downgrades, while emerging market stocks raced to a fresh 32-month high on hopes of an early rollout of COVID-19 vaccines. The rand gained 0.8% with the safe-haven dollar under pressure, while a widely watched EM equities index rose 0.9% to hit new highs since March 2018, supported by strong gains across Asian bourses. Investors shrugged off news that credit rating agencies Fitch and Moody’s had both cut South Africa’s sovereign ratings further into junk – moves that the finance ministry warned could drive up the government’s borrowing costs and constrain the fiscal options. Russia’s rouble, Mexico’s peso rose about half a per cent each, while their Asian peers also edged higher. The mood across global markets brightened at the start of the week as a top US official said health regulators would likely approve the distribution of the COVID-19 vaccine produced by Pfizer and German partner BioNTech in mid-December. Meanwhile, Britain’s AstraZeneca said its vaccine could be around 90% effective without any serious side effects. “In a reversal of the COVID trade, some currencies with weak fundamentals (such as ZAR, TRY) should play catch-up to the stronger ones (North Asian currencies for example),” EM strategists at Societe Generale wrote in a note. “This rotation means that the high degree of divergence seen in 2020 will continue into next year and leave average EM currency performance roughly flat.”