Rand firms against US dollar

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NewRandMoney

Reuters.

Johannesburg - South Africa's rand edged up to its firmest level this year against the dollar, after stronger than expected credit growth data backed the case for more rate increases this year.

The rand touched a session high of 10.5575, up nearly 0.2 percent from Friday's close in New York and the strongest since January 2, according to Thomson Reuters data.

The local currency edged up slightly after central bank data showed growth in credit demand from South Africa's private sector quickened to 8.67 percent year-on-year in February from 8.16 percent in January.

This added to strong gains last week after the Reserve Bank left its repo rate on hold but made clear further interest rate increases were on the cards, after a surprise 50 basis point hike in the repo rate in January aimed at tempering inflation.

But the rand remains vulnerable to South Africa's wide budget and current account deficits, exposing the local unit to sell offs during episodes of global risk aversion.

“As we enter the new quarter, we are not convinced the market has become structurally bullish about the rand,” Barclays Africa said in a currency note.

Government bonds were largely flat in early trade, with the yields for the 2026 instrument, the benchmark for the secondary market, unchanged from Friday's close at 8.375 percent.

The note maturing in 2015 dipped just half a basis point to 6.8 percent. - Reuters


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