Johannesburg | Thursday
SOUTH Africa’s rand and bonds extended their recovery on Thursday, as the dust settled following a global emerging market battering triggered mainly by Argentina’s debt problems.
Traders said that domestic markets were likely to continue to correct from losses seen as overdone, although further bad news from overseas coupled with the outcome of a domestic land grab — could have an adverse impact.
At 0700 GMT, the rand was three cents firmer from the previous day’s closing levels at 8.2410 against the dollar — comfortably off its latest low of 8.34.
”I wouldn’t be surprised if we firmed to the 8.18 level, although one has to accept that Argentina has a problem which puts pressure on general on emerging markets, which one can’t escape,” a Johannesburg-based trader said.
Local traders are waiting for the outcome of a court eviction order against hundreds of impoverished squatters on land near Johannesburg, with police due to move into the area on Thursday.
The government has said it will not tolerate Zimbabwe-style land invasions which have worsened the economic crisis in the neighbouring country but the occupation, orchestrated by the opposition Pan Africanist Congress, has fanned local concern.
South African bonds made substantial headway, with the yield on the most liquid R150 bond due 2005 six basis points firmer at 10,64% while the longer-dated R153 was down seven basis points at 11,17%.
Foreigners bought a net R128,7-million worth of bonds on Wednesday after selling R154,32-million worth on Tuesday, latest bond exchange data showed. -Reuters