Monday, 31 December 2012 13:14
JOHANNESBURG: South Africa's rand edged firmer against the dollar on Monday, cheered by receding worries about domestic economy policy and despite the looming prospect of a fiscal crunch in the United States.
The rand hit a session high of 8.4695/dollar, its strongest level since Dec. 19, and was at 8.4650 by 0705 GMT, slightly up from Friday's 8.48 close.
"The rand continues to trade relatively firmly; we've seen a strong retracement from the sell-off around all the negative sentiment towards the end of the year," said Duncan Howes, a trader at Absa Capital.
The local unit has clawed back significant ground after breaching 9.00/dollar last month as worries that a conference of the ruling ANC would herald radical policy changes added to the negativity brought by wildcat strikes in the key mining sector.
"The ANC conference, if anything, was a little bit more positive. The market is definitely a little bit more positive on the local fundamentals of the country -- there's a lot less fear factor out there," Howes added.
The could rally towards 8.10/dollar in the early part of the new year, but a negative turn in sentiment might push it back to the 8.65/70 area.
Government bonds were flat in very thin year-end trade, with the yields on the benchmark 14-year and three-year issues each steady at Friday's closing levels of 7.27 percent and 5.325 respectively.
With no prospects of domestic news to drive the currency, market focus should mainly be on last-ditch efforts to avert a "fiscal cliff" in the United States which could push the world's largest economy into a recession.
Copyright Reuters, 2012