JOHANNESBURG: South Africa's rand held steady against the dollar early on Monday, trading stronger than the psychologically key 10-to-the-dollar level as investors' concerns eased about an early withdrawal of US stimulus.
At 0654 GMT, the rand was at 9.8870 to the dollar, not far off its 9.8800 close in New York on Friday.
"Dollar/rand (is) pushing at the key 9.83/85 support level. A break would open up scope for a proper rand recovery but if the level holds, we could be trapped in a range for a while," said Rand Merchant Bank in a note to clients.
"Assuming no major data surprises, it looks as if tapering will start in September. For us, the key issue is whether foreign investors will return to emerging markets. Initial signs are positive," the bank said, citing data that showed offshore investors buying local bonds and equities last week.
Global markets have been jittery in the past two weeks by the US Federal Reserve announcing it would gradually withdraw stimulus to its economy.
However, US economic growth data last week disappointed, giving hope to markets that the Fed would not reduce its bond-buying programme as early as some had speculated.
On Monday, South African bond yields were down 5.5 basis points to 7.85 percent on the benchmark 2026 bond. Investors will be watching for local PMI data at 0900 GMT and vehicle sales data at about 1100 GMT.
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