JOHANNESBURG: South Africa's rand gained against the dollar on Tuesday, buoyed by a deal to reduce Greek debt that will help the euro zone's most heavily indebted country to avert bankruptcy for now.
But the currency failed to break out of the 8.80-9.00 range where it has been stuck for the last week and in early trade underperformed its emerging market peers, as investors remain wary ahead of the ruling ANC's elective conference in December.
The rand was trading at 8.8500 to the dollar at 0648 GMT, 0.2 percent firmer than Monday's close.
Euro zone finance ministers and the International Monetary Fund agreed on Monday to cut Greece's debt to 124 percent of GDP by 2020 and are also set to approve the release of a fresh installment of loans.
The euro rose to a one month high of $1.3010 following the announcement but the rand's move was modest in comparison, said Brigid Taylor, head of institutional sales at Nedbank.
"The outcome was very positive but the rand is still lagging and underperforming," she said. "From that perspective we do therefore see further upside momentum in place."
Taylor added that South Africa's fundamentals and uncertainty about the outcome of its elective conference in Mangaung in December were dampening sentiment.
"Next year we're going into a fiscal year that will have to be prudently managed so it is quite key that we have leadership that can maintain that prudent fiscal spend for the foreseeable future," she said.
The market will also be watching the release of GDP figures for the third quarter due later on Tuesday. Analysts expect a weaker print, reflecting the impact of strikes in the mining sector.
The yield on the benchmark 2026 bond rose one basis point to 7.63 percent and that for the 2015 bond held steady at 5.52 percent.