Cape Town - The rand gained for the first time in four days as investors bet the currency’s decline to a four- year low was overdone.
South Africa’s currency strengthened 0.3 percent to 9.2309 per dollar by 9:10 a.m. in Johannesburg.
Yields on benchmark 10.5 percent bonds due December 2026 were unchanged at 7.45 percent, after climbing 6 basis points, or 0.06 percentage point, yesterday.
The rand slumped 1.9 percent in the first three days of this week to the weakest level since April 2009 as the current-account deficit remained near a four-year high and retail sales slowed in January, adding to signs Africa’s largest economy is stalling.
The depreciation may have been too steep, a technical indicator signaled today.
“The reality is that the trend in the rand cannot continue in this one direction unabated,” Quinten Bertenshaw, a Johannesburg-based analyst at ETM Analytics, said in e-mailed comments.
“At some point, the weakness of the rand will be self-correcting.”
The stochastic oscillator for the rand versus the dollar was at 14.9 today, below the 30 threshold that signals the currency may have depreciated too quickly and is poised for a rebound.
The measure, which tracks the price of a currency relative to its highs and lows during a particular period, has been below 30 for the past six days. - Bloomberg News