Johannesburg - The rand gained for the first time in three days after US lawmakers resumed talks to avoid a debt default and reopen the government, fueling demand for riskier assets including South African bonds.
Senate leaders are rushing to lock down an agreement to end the fiscal impasse, stepping in after House Republicans’ last- minute plan to avert a government default collapsed.
Fitch Ratings Ltd. put the US economy on watch for a possible credit downgrade, citing lawmakers’ inability to forge a deal. South African retail sales expanded at the slowest pace in 3 1/2 years in August, a report today may show.
“Sentiment in global markets has swung from yesterday’s hope that a US political deal will be reached, to despair overnight, and back to hope this morning,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e-mailed comments.
“One still has to assume that a last- minute deal will be struck; the alternative is too daunting to contemplate.”
The rand appreciated 0.2 percent to 9.9633 per dollar as of 10:23 a.m. in Johannesburg.
Yields on benchmark 10.5 percent bonds due December 2026 were little changed at 7.93 percent.
Foreign investors bought a net 1.03 billion rand ($103 million) of South African bonds yesterday, the most in a day since September 27, data compiled by Bloomberg show.
Retail sales in Africa’s biggest economy rose 1.1 percent in August from 2.8 percent the previous month, a report may show at 1 p.m. in Pretoria, according to the median estimate of 12 economists in a Bloomberg survey.
Growth at that rate would be the slowest since February 2010. - Bloomberg News