South Africa's rand wiped out its earlier losses and briefly turned firmer against the dollar in volatile trade on Monday while government bonds also rose, but underlying weakness remains over concerns about euro zone debt.
The rand , which earlier fell as much as 2.8 percent to a session low of 8.3470 to the dollar, briefly rallied to around 8.1135 as hedge funds sold dollars to take some profits.
The rand was at 8.14 by 11:39 SA time, down 0.25 percent from Friday's close at 8.12.
The yield on the four-year bond fell 13 basis points to 7.01 percent while that for the 2026 bond was 12.5 basis points lower at 8.545 percent.
“Liquidity is pretty poor at the moment and with that the rand can move 3 or 4 cents just on any kind of flows,” Standard Bank trader Warrick Butler said.
“On that quick move higher (weaker) this morning, we saw hedge funds and real money selling (dollar). And there was maybe a bit of profit-taking as well. With all this volatility people are trying to catch the moves either way.”
The rand took its cue from the euro, which pared losses against the greenback after a German survey of business sentiment came in above market expectations.
“We have seen risk in emerging markets come back on a bit ... We are seeing some local exporters also helping rand levels as well as gold trading stronger again back above $1,620/ounce,” Nedbank Head of Institutional Sales Brigid Taylor said.
The rand is still down 22 percent against the dollar so far this year, and, because it is a highly liquid currency, remains vulnerable to any turns in portfolio flows in a volatile global market environment such as the prevailing one. - Reuters