JOHANNESBURG: South Africa's rand touched a fresh 7-day high against the dollar on Wednesday, mainly taking its cue from a resurgent euro in the absence of market-moving domestic news and data as the year winds down.
Government bonds also rose and yields dropped amid renewed investor appetite for emerging market assets which have seen a heavy sell-off in recent months on concerns about the debt crisis in the euro zone.
The rand was trading 0.9 percent firmer at 8.1250 against the greenback by 0644 GMT, compared with Tuesday's close of 8.1990. It briefly touched 8.1052 earlier on Wednesday, its strongest level since Dec. 12
"We're supported by the euro at the moment and the euro has gained quite nicely," RMB trader Lee Naisbitt said, adding the rand's next target would be 8.08. A breach of that would open up another rally to 8.04 and possibly 7.9050, he added.
Because a large chunk of players were out of the market for their year-end holidays, currency moves tended to be exaggerated.
"But the theme is stronger for the rand and we should see a firmer tone going forward. (The euro) is looking a bit more positive than it has been in some time and I think the rand is going to take some gains from that," Naisbitt said.
Government bonds edged higher and yields were inversely lower, with the four-year bond and the longer-dated 2026 each dropping eight basis points to 6.81 percent and 8.555 percent respectively.