Rand steadies after four-year lows

Investors were worried this week about South Africa's current account and budget deficits.

The rand was at R9.17 to the dollar, the same level it closed at in New York on Tuesday.

It hit levels from April 2009 after the central bank said the current account shortfall was wider than anticipated, putting pressure on the already struggling rand.

The current account data means the rand is likely to remain weak and stoke inflationary pressures, reducing chances the Reserve Bank will cut interest rates when its monetary policy committee meets next week.

The rand found support at the R9.21 level, from where it bounced in April 2009.

"Rand sentiment is negative at the moment and momentum for the rand is lower, so the rand could still weaken further in the coming three months," said Tradition Analytics in a note to clients.

Vanilla bond auction
"This should drive inflation expectations up and keep interest rate expectations rising too."

Bond prices fell, hit by expectations of higher inflation from the weak rand.

The yield on the 2015 bond climbed 1.5 basis points to 5.385%, while that on the benchmark 2026 issue added three basis points to 7.425%.

Treasury will announce issuance plans for next week's vanilla bond auction at 9am.

The statistics agency will release the first retail sales print for 2013 at 11am.

The data is one of only two economic indicators that continually showed growth last year as consumer spending helped to prop up slowing economic growth. However, sales growth slowed to 4.3% for 2012 compared with 5.9% in 2011, in a sign that households are battling with high levels of debt and job insecurity as a quarter of the population remains without work.

Reuters
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