The rand held at its best level for the year on Wednesday, with its strengthening trend set to continue near-term as gold prices extend their rally and with the market poised for further rate hikes this year.
At 0640 GMT, the rand was five cents firmer at 9,89/dollar, testing its strongest level reached on Tuesday, which was a six-month high.
”I think we’ll trade sideways to stronger — we’re looking at 9,80/95 over the next two or three days,” Barclays Treasury head Andy Horne said.
”The bounce in the gold price is helping. Ultimately we are likely to test the 9,50 area in the next couple of months and move back to 10 towards the end of the year.”
Spot gold opened at $323,35/323,85 in Europe, its strongest open on the European market for 2-1/2 years.
Stronger commodity prices, the weaker dollar and shift in sentiment in favour of South Africa has helped spur the rand to rally more than 15% so far this year, making it the best performing currency so far in 2002.
South Africa’s central bank is poised to raise interest rates by 100 basis points for the third time this year at its next policy meeting on June 12-13, following comments from its governor Tito Mboweni to that effect last week.
Data released on Tuesday did nothing to dispel that view, showing that South African gross domestic product rose a seasonally adjusted and annualised 2,2% in the first quarter of 2002, a notch above expectations.
Bond yields were largely steady, with yields on the key R150 bond due 2005 and the R153 due 2010 both up one basis point at 11,98% and 11,91% respectively. – Reuters