JOHANNESBURG: The South African rand touched a four-day high against the dollar on Tuesday and government bonds closed firmer, pushing yields lower after a well supported weekly Treasury auction.
Bonds held their ground despite news that the Treasury may issue five new bonds as early as this week, helping to plug a 10-year benchmark gap and extend the government yield curve by a further seven years.
South Africa's recent promotion into a major bond index has fed interest among international investors in Africa's largest economy and biggest debt market.
The rand climbed to 8.4152/dollar, its strongest level since May 30, but retreated to 8.4450 by 1524 GMT, a gain of 0.54 percent over Monday's 8.4910 close.
"The rand has performed very well today, strengthening from the lower 8.50's area to the lower 8.40's. There seems to be some steadying in the market," RMB trader Jim Bryson said.
"The rand was really very oversold up towards 8.70, but we are still very much euro-dependent. We would have to get through the lower 8.30's to totally change the overall tack and take the pressure off completely."
The rand has regained some of its poise this week after a sharp decline to a three-year low last week, which capped losses of nearly 9 percent in May as investors fretted that debt problems bedevilling euro nations could hurt global growth.
Government bonds gained alongside the rand, partly boosted by an auction earlier where the Treasury sold five-year, 24-year and 29-year paper, attracting bid-to-cover ratios as high as 4.29.
Benchmark yields ended lower, with the three year paper edging down 2.5 basis points to 6.34 percent while the equally heavily traded 14-year issue dipped half a basis point to 8.4 percent.
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