Rand steadies, bonds ease ahead of auction

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IOL world currency3 Graphic: renjith krishnan

South Africa's rand held steady against the dollar in early Tuesday trade but remained vulnerable to global investor jitters over the euro zone debt crisis which pushed the currency to three-year lows at the start of this month.

The currency appeared unfazed by news that South Africa had committed $2 billion of its reserves towards a $456 billion IMF fund to deal with the effects of the euro zone woes on the global economy.

Government bonds were a touch softer ahead of a weekly auction likely to add 2.1 billion rand ($251.8 million) of paper to the secondary market.

Yields on the three-year and 14-year benchmarks each added one basis point to 6.12 percent and 8.155 percent respectively.

By 08:47 SA time the rand was at 8.3005 against the greenback, little-moved from its previous day close of 8.29.

But sentiment remains wary despite a brief rally on Monday after a positive outcome to elections in debt-ridden Greece which allayed some fears of a messy exit from the euro zone, a key trading partner for South Africa.

The rand, which is highly vulnerable to swings in risk appetite because of the liquid nature of its market, has suffered some of the heaviest losses against the dollar among emerging market currencies this year, hitting a trough of 8.71 on June 1.

“The rand has managed to maintain its recent gains and the firmer bias could remain intact in the short term,” Standard Bank strategist Nomvuyo Guma said.

“However, with so much happening on the global front, the rand remains at the mercy of offshore developments.” - Reuters


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