- "This could widen spreads and increase intraday volatility in the event of a market shock, especially as month-end flows come into play."
JOHANNESBURG: South Africa's rand firmed on Monday, building on the previous week's gains as the dollar failed to maintain a rally made on Friday after a key measure of US inflation showed stronger price gains than expected.
At 0700 GMT the rand was up 0.2% at 13.7625 per dollar from a close of 13.7900 on Friday.
The US inflation data released on Friday briefly drove the greenback higher against other currencies, but it ran out of steam ahead of a long weekend in New York and London.
For now, the data has had limited impact on investors' expectations that the Federal Reserve will keep the current pace of asset purchases for many months before tapering.
The dollar, measured against a basket of major currencies, was down by 0.03%.
The rand hit its firmest since February 2019 last week, driven by investor bets that the US central bank would lend at low rates for longer despite signs of higher inflation in the world's biggest economy.
"As we head into the first trading session for the week, note that liquidity conditions will be significantly thinner than usual today, with both the UK and the US enjoying bank holidays," said economists at ETM Analytics.
"This could widen spreads and increase intraday volatility in the event of a market shock, especially as month-end flows come into play."
Bonds were firmer, with the yield on the benchmark 2026 government issue down 2.5 basis points to 8.925%.