Johannesburg | Wednesday
SOUTH Africa’s rand pulled itself well off its latest low against the dollar on Friday on news that Zimbabwe had agreed to halt the occupation of white-owned farms and enforce the rule of law in land reform.
At 0700 GMT the currency was trading eight cents firmer at 8.4530 against the US unit, fuelling a similar recovery in the domestic bond market. But traders said they believed the rand would give up some of its hard-won gains as players waited to see what would actually happen in the neighbouring country.
”People don’t think this will last. The rand will probably kick back to 8.50,” a Johannesburg-based trader said.
A modest recovery in the euro, the currency of South Africa’s main trading partner, was also supportive, he said.
On Thursday, the rand sank to a new low of 8,53 against the dollar as offshore players hedged against domestic assets to counter the dollar’s strength and nagging concerns over Zimbabwe’s deepening political and economic crisis.
Against the euro and the pound, the rand was hovering at Wednesday’s closing levels of 7,56 and 12,33 respectively. It has lost about eight percent of its value on a trade-weighted basis this year, versus 12,5% last year.
Bonds recovered strongly, although traders were also skeptical that these gains would hold.
Yield on the most traded R150 bond due 2005 and the R153 due 2009 were both 10 basis points lower at 10,13% and 10,755% respectively.
Foreigners were net sellers of R535-million worth of South African bonds on Thursday, after selling a net R788-million worth on Wednesday, latest bond exchange data showed. – Reuters