South Africa’s rand crawled back from early lows in thin trade on Thursday, while bonds were marginally firmer on supply shortage and expectations that inflation was close to peaking, traders said.
The rand weakened to 10,6155 against the dollar at one point, before recovering slightly to around 10,5850 at 0845 GMT. It closed at 10,57 in overnight trade.
”Nothing much is happening. It’s a very quiet day. We are not seeing any flows. It’s mostly technicals which are driving the market,” said a Johannesburg-based trader.
He said the rand was likely to trade in a range between 10,56-10,62 for rest of the session.
Bonds eked out modest gains amid optimism that inflation was close to peaking, traders said. They said the market was also being supported by stock shortage because of the government’s minimal borrowing requirements.
”Although the inflation figures were not good there is no real supply out there. Local investors are short on the long end of the curve,” said a bond trader.
South African producer prices rose by an annual 15,4%in August from 15,2% in July, raising the spectre of a fifth interest rate increase this year. But the month-on-month increase slowed down to 0,8% from 1,2%in July.
”Investors are looking through the inflation figures and are hopeful that it will become manageable again,” she said.
The yield on the most traded R150 due 2005 fell 3,5 basis points to 12,335 percent while the benchmark R153, due 2010, was bid at 11,84% from 11,905% at close on Wednesday. – Reuters