Johannesburg - The rand weakened on Friday but stayed within its recent trading range, marking time before the release of volatile trade numbers that usually hurt the currency, while surprise monetary easing by the Bank of Japan drove bond yields to year lows.
South Africa is running budget and current account deficits, making the rand particularly vulnerable to changes in sentiment by global investors.
The expected normalisation of low interest rates in the United States has hit emerging market currencies, plunging the rand to five-year lows this early this year.
Investors will be keenly watching September trade data at 14:00 SA time.
The trade shortfall is forecast to have narrowed to 12.15 billion rand, from 16.3 billion rand in August.
The rand traded within the previous session's range, down 0.2 percent from its previous close to 10.8900.
Government bonds rallied to their best in a year after the Bank of Japan unexpectedly eased monetary policy, calling it a pre-emptive move to stoke inflation.
“It's purely on that announcement this morning,” said Marten Banninga of WWC Securities.
“It's the expectation of that carry trade scenario which comes into play again.”
The yield on the 2026 bond dropped 7.5 basis points to 7.835 percent, levels last seen in October 2013. - Reuters