Johannesburg - The rand declined for the first time in three days as investors gauged the currency’s gain last week, the biggest in almost four months, was overdone.
South Africa’s currency weakened 0.3 percent to 8.8682 per dollar as of 8:53 a.m. in Johannesburg. Yields on 10.5 percent bonds due December 2026 were unchanged at 7.30 percent after rising 18 basis points last week.
The rand soared 1.3 percent on February 1, its biggest daily gain since October 9, after US jobs data added to evidence of a recovery in the world’s biggest economy, boosting South Africa’s export prospects.
The currency climbed 1.2 percent in the week, its first five-day gain since the week ending December 21.
The recovery isn’t justified given South Africa’s economic outlook, said Quinten Bertenshaw, an analyst at ETM Analytics in Johannesburg.
“The underlying bias remains firmly in favor of further dollar gains and so one should treat the most recent dollar-rand retreat with some skepticism,” Bertenshaw wrote in comments e-mailed to clients today.
“It is too soon to be talking about a strategic short-dollar position.” - Bloomberg