Cape Town - South African bonds rose for a second day, driving benchmark yields to the lowest since June, as an end to the US fiscal impasse fueled demand for riskier assets.
The rand fluctuated between gains and losses.
US President Barack Obama signed into law a measure ending the 16-day government shutdown and extending the nation’s borrowing authority until early next year, easing concern of a default in the world’s biggest economy.
Foreign investors bought a net 384 million rand ($39 million) of South African bonds yesterday, according to data from the Johannesburg Stock Exchange compiled by Bloomberg.
“Global risk appetite gained momentum as it became increasingly clear that US lawmakers would lift the debt ceiling,” Theuns de Wet, head of global markets research at Rand Merchant Bank, said in e-mailed comments.
This improvement should support the bond market again today.”
Yields on benchmark 10.5 percent bonds due December 2026 dropped seven basis points, or 0.07 percentage point, to 7.8 percent by 10:10 a.m. in Johannesburg, the lowest on a closing basis since June 14.
The rand gained 0.2 percent to 9.8448 per dollar after earlier depreciating 0.2 percent.
News of the US agreement sent stock prices around the world higher, while the dollar weakened against most of its major peers. The rand is the worst performer this year among 16 major currencies tracked by Bloomberg, retreating 14 percent against the dollar. - Bloomberg News