South Africa's rand ticked up slightly against the dollar on Tuesday although concerns about the banking sectors of some European countries are expected to keep a lid on risk appetite and curb gains by emerging market assets.
The main focus for the day should be on the debt problems in Europe, but domestic GDP data due out at 11:30 SA time will be the latest gauge on whether Africa's largest economy needs more stimulus in the form of interest rate cuts later this year.
At 08:28 SA time, the rand traded at 8.3215 against the dollar, 0.31 percent firmer than Monday's close of 8.3475.
Some analysts say the rand is looking oversold after weakening 7.8 percent so far this month on fears that if countries like Greece are forced into a chaotic departure from the euro zone, South Africa would be rocked by the damage in its major export market.
“Today I continue to favour the 8.28-8.40 range, cautious that we are still due a correction in stale short-term long dollar positions but happy to take advantage of any major move lower to get long again,” Standard Bank trader Warrick Butler said in a note.
“Bear in mind that today is also the start of corporate month-end and demand will pick up from local importers.”
Government bonds weakened slightly in early trade, nudging the yield on the three year paper 1.5 basis points higher to 6.38 percent while that for the 14-year issue added a basis point to 8.34 percent.
Yields could head lower if data from Statistics South Africa points to lower growth in the first quarter of the year, with economists polled by Reuters last week seeing a slowdown to 2.4 percent in Q1 from 3.2 percent in Q4 2011. - Reuters