South Africa’s rand gave back some ground against the dollar on Wednesday after the previous day’s sharp gains, but looked to stabilise as liquidity returns to markets after recent turmoil.
Government bonds also rallied, and yields fell up to 21 basis points, following on the rand currency’s strong gains overnight as well as official data showing a lower-than-expected domestic credit growth number.
By 6.45am GMT, the rand traded 0,58% softer at 10,34 against the greenback, compared to Tuesday’s close at 10,2799 in New York. The local currency was still well above Tuesday’s session low of 11,058/dollar.
”The rand still looks pretty good, obviously reacting to a massive equity move overnight. There has been a little bit of follow-through in Asia. Equity markets are certainly contributing to the risk trade being put back on,” a Johannesburg trader said.
”The current slight weakness is really off natural consolidation than further weakening. Dollar-yen has come off, Aussie-dollar has come off and the rand seems to track those currencies.”
”Hopefully things are stabilising, but in saying that, people are still wary that this might be just a brief rally and there’s more danger to the downside,” he added.
The yield on the benchmark 2015 bond was down 15,5 basis points at 9,255 percent, after earlier falling to 9,185 percent. The yield on the 2036 note was down 17,5 basis points at 8,46%.
South Africa’s blue chip Top-40 December futures contract was last up 3,83%, suggesting a strong start for the bourse at 7am GMT. – Reuters