S.Africa’s rand softer, seen under pressure

By IndepthAfrica
In Business
Jan 23rd, 2012

South Africa’s rand softened against the dollar on Monday and could weaken further as failure by Athens and its creditors to clinch a debt swap deal re-ignited worries of a chaotic Greek default.

South African government bonds were largely steady and would likely take direction from the rand, with the short end of the curve seen under more under pressure on increasing concerns about domestic inflation.

The rand was trading at 7.9671 against the dollar at 0635 GMT, 0.3 percent softer than Friday’s New York close of 7.9450.

The rand gained about two percent against the dollar last week, piercing its 100-day moving average at 7.9320 to hit a 2-month high of 7.8976.

“The rand has stopped strengthening after Greek authorities and the holders of Greek debt failed to reach consensus about how best to restructure the terms of their existing Greek bond exposure,” said Absa Capital in a note.

“With risk aversion creeping back into the market on the aforementioned EU debt concerns … it is poised to give back some of last week’s gains.”

On the domestic political front, the firebrand leader of the ANC youth league Julius Malema is fighting for his political survival as an appeal against his five-year suspension gets underway, although a decision is not expected on Monday.

Yields on government bonds fell a bit, with the yield on the 2015 bond down 0.5 basis points to 6.705 percent and that on the 2026 issue down one basis point to 8.345 percent.

Stocks looked set for a lower open after the bourse hit new records for the fourth day in a row on Friday. The JSE’s Top-40 March futures contract was down 0.08 percent before the start of trade at 0700 GMT.Reuters


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