JOHANNESBURG: Yields on South African bonds edged firmer while the rand softened against the dollar on Wednesday as investors held off ahead of an interest rate decision by the central bank.
Local bonds continued to gain from demand for higher-yielding emerging market assets after Japan's surprise slip into recession, with the yield on the benchmark paper due in 2026 shedding 0.5 basis points to 7.815 percent.
By 1603 GMT the rand had weakened 0.38 percent to 11.0725 per dollar, reversing gains that saw it reach a two-week low against the greenback in the previous session.
But both the currency and local bonds were little moved by consumer inflation data published earlier in the session, with headline inflation at 5.9 percent year-on-year in October, unchanged from September and in line with market expectations.
Analysts said the focus would be on the detail contained in the central bank's policy statement when it announces its final interest rate decision for the year -- the first under new governor Lesetja Kganyago -- on Thursday.
"We've been in a wary market for the last couple of days. Most people are reluctant to get involved at the moment because of the MPC tomorrow," said Dale Forssman, a bond trader at World Wide Capital Securities.
Economists polled by Reuters expect the central bank to leave the rate unchanged at 5.75 percent as headline inflation remained just below the bank's 6 percent ceiling.
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