Rand at 8.96 against the US dollarComment on this story
Johannesburg - South Africa's rand steadied against the dollar early on Friday, looking to end the week at the same levels it started after managing to break through tough resistance in the previous session.
The rand was at 8.9610 to the dollar at 08:49 SA time.
It opened at similar levels on Monday, but later fell through the psychologically key 9 rand barrier. It has spent the last three sessions trying to make a convicing rally away from 9 rand.
“We favour a stronger rand because there's a lot of risk premium that has been priced into the South African currency,” said Garth Klintworth, a trader at Absa Capital.
“The rand has underperformed a lot because of poor sentiment and unless we get follow-through with more negative news, some of that risk premium needs to unwind.”
The rand has been underperforming its emerging market peer currencies against the dollar, struggling to strengthen convincingly as violent labour strikes since late last year hit sentiment towards Africa's biggest economy.
A slower-than-expected rise in factory gate prices in December aided the currency's correction in the previous session.
Once the rand broke 9 rand, it triggered stop losses all the way to 8.92, pushing investors to cover short rand positions.
Dealers say if rand bulls manage to rally past 8.95, it may open up a test of the January 18 high of 8.9190.
Offshore bond-buying and the positive bias on the rand drove government benchmark bond yields down 1.5 basis points to 5.345 percent on the 2015 note and 2 basis points to 7.325 percent on the 2026 issue.
The Treasury is looking to sell 800 million rand in 2025, 2038 and 2050 inflation-linked debt.
Investors will look at PMI data for signs of improvement in the key manufacturing sector, a major employer that accounts for 15 percent of GDP.
The index has been below the bust-or-boom line for the four months to the end of 2012. January's data is due to be released at 0900 GMT.
US non-farm payrolls data due in the session is also likely to affect the local currency, boosting sentiment if the jobs number beats market expectations. - Reuters