Johannesburg - South Africa's rand firmed up against the dollar on Wednesday after stronger than expected retail sales data, but further gains may be limited if the US debt impasse is resolved and the dollar climbs.
The rand was at 9.8900 to the dollar at 17:46 SA time, up 0.9 percent from its close in New York on Tuesday.
South Africa's retail sales grew at 3 percent year-on-year in August, compared with a revised 2.9 percent in July, Statistics South Africa said on Wednesday.
Economists had expected sales growth to slow to 1.2 percent.
However, traders said developments in the United States will be the main driver of the rand in the days ahead, with the market watching for the release of economic data delayed during the budget shutdown.
Lawmakers appeared close to reaching a last-minute deal to raise the US debt limit and end the shutdown on Wednesday as Republicans said they intended to vote on a plan emerging in the Democratic-led Senate.
“If this deal does actually go through and the Federal government is reopened then everybody is going to be awaiting all of the outstanding US data,” said ETM analyst Gareth Brickman.
“The immediate reaction in risk markets could wear off so I don't really see the rand meaningfully appreciating.”
Government bonds strengthened, with the yield on the 2026 issue declining 4 basis points to 7.885 percent, while that on the 2015 instrument fell 8 basis points to 5.855 percent. - Reuters