Rand gets support from rate viewsComment on this story
Johannesburg - The rand gleaned support from expectations that interest rates in South Africa are going to continue higher, keeping the local currency holding steady against a stronger dollar.
Cheered by housing and inflation data, the dollar hit multi-month highs against the euro and extended gains against major currencies.
South Africa's rand was little moved, instead taking on a firmer tone later in the session.
It was at 10.5990 to the dollar at 16:33 SA time, just slightly firmer than its close in New York on Monday.
“The rand is doing pretty well considering how strong the dollar is on global markets. It's all interest rate plays at the moment,” said Ion de Vleeschauwer, currency trader at Bidvest Bank in Johannesburg.
South Africa will release July inflation data on Wednesday and traders are betting on consumer price pressures to keep the central bank raising interest rates.
The bank hiked rates by 25 basis points to 5.75 percent in June, adding to a half percent hike at the start of the year. It has announced a gradual tightening cycle as the weaker rand fans inflation.
Yields on government debt dropped 5 basis points on the benchmark 2026 bond and 7 points on the 2044 issue as traders showed appetite for the long duration paper on Tuesday.
The R186 traded at 8.26 percent while the R2044 was at 8.995 percent, the session's lowest levels on the yields.
A government auction of 2032, 2037 and 2044 paper saw cover ratios of 3.8, 3.1 and 5.2, much higher than the average for each issue over its past four auctions, analysts said.
The bonds were also sold at lower yields than at their previous sale last week. - Reuters