Rand consolidates post Fed gains

.

.

Published Dec 19, 2014

Share

Johannesburg - The rand consolidated recent gains against the dollar on Friday as positive sentiment towards emerging markets continued to favour local assets following indications by the U.S. Fed that it would hold interest rates until at least Q2 in 2015.

There was little reaction to domestic producer inflation which came in broadly in line with market expectations, the year-on-year figure softening to an expected 6.5 percent.

By 0645 GMT the rand had firmed 0.1 percent to 11.5500 per dollar after rallying 1 percent to below the 11.5000 support in the previous session, only to give up those gains by close of local trade.

Yields on government bonds edged up, with the benchmark issue due in 2026 adding 4 basis points to 8.02 percent .

Traders expect the local currency to remain in the weaker end of a recent range as the year winds down and liquidity thins, with trade balance numbers due on Dec. 30 the only major domestic data release left in 2014.

“Bias remains to buy dips to 11.3800/4000 however, with liquidity what it is and bound to worsen over the next two weeks, it may be prudent not to get too involved intra-day “, Standard Bank currency analyst Oliver Alwar wrote in a morning market note.

A Reuters poll of economists predicts South Africa's trade deficit will narrow to 7.1 billion rand in November after hitting 21.33 billion rand in the previous month.

Reuters

Related Topics: