Johannesburg - South Africa's rand was trading near a one-month high on Friday as the dollar weakened on expectations of a further delay to the US Federal Reserve's stimulus programme.
The rand was at 9.8200 to the dollar at 06h08 GMT, in line with its close in New York on Thursday. It hit a high of 9.7960 during that session as global markets rallied after US Democrats and Republicans reached an 11th hour agreement on Wednesday to end the fiscal impasse.
Markets have now turned their focus to the economic impact of the budget showdown and the implications for the Fed's bond-buying programme. The dollar dropped to a near eight-month low on Friday on expectations that the potential damage to the economy from the weeks-long government shutdown could discourage the Fed from tapering its stimulus until early next year.
“The negative growth implications associated with the US shutdown, the nomination of Janet Yellen as the new Fed Chairman and some dovish remarks from other Fed officials in recent days have led a growing number of participants to believe that tapering might be delayed for a while longer,” Absa Capital said in a note.
Government bonds rallied to their strongest level in four months. The yield on the 2026 government bond was at 7.77 percent, down 2 basis points, while that on the 2015 issue was 9 basis points lower at 5.75 percent. - Reuters