JOHANNESBURG: South Africa's rand was steady on Tuesday after hitting a two-week high against the dollar and looked set for a firmer session with emerging markets supported by views the US Federal Reserve will maintain monetary easing.
At 0638 GMT, the rand was at Monday's closing levels, coming back from the two-week high of 9.8540 hit earlier. The rand has managed to open below the psychologically key 10 level for two sessions, signalling some strength in the currency.
Emerging markets were buoyed by weaker-than-expected US retail data, which shifted market expectations about the timing of the Federal Reserve's withdrawal of stimulus to the world's biggest economy.
The Fed's bond-buying programme has seen billions of dollars flow to high-yielding emerging markets such as South Africa, with expectations of a withdrawal weighing on risk sentiment.
"The dollar remains defensive and the euro has continued to climb this morning, which is the catalyst for the rand gains. Foreigners were net buyers of South African government bonds on Monday, which has also helped support the currency," said Christopher Shiells of Informa Global Markets.
Investors remained cautious over the rand due to worries about an acrimonious start to wage negotiations in the gold industry, which has cast a shadow over a mining sector beset by labour friction that has slowed production of commodities for export.
The Treasury is due to sell 2.35 billion rand ($237 million)of bonds in the session. Results are expected after auction closes at 0900 GMT.
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