JOHANNESBURG: South Africa's rand was steady against the dollar on Wednesday as demand for the local currency ahead of the country's debut in a key government bond index next week offset renewed risk aversion over Europe's debt problems.
The rand traded at 8.2378 to the greenback by 0642 GMT, barely changed from Tuesday's close at 8.2350.
Demand for local assets has been boosted in recent weeks by South Africa's inclusion on Oct. 1 in the World Government Bond Index (WGBI}, tracked by many fund managers.
This should keep the rand supported above 8.29 against the dollar despite renewed worries about contagion from euro zone liquidity problems and wage related domestic strikes that have hit the mining sector, said RMB chief dealer Jim Bryson.
"If the rand gets above 8.25 we will go to 8.29 but we would still expect to see foreign interest there, buying rands ahead of WGBI," Bryson said.
"This whole WGBI thing is keeping the local industrial strike situation off the radar at the moment although it can't be good for sentiment going forward," he added.
Government bonds were steady to firmer in early trade, with the yield on the three-year benchmark flat at 5.31 percent while that for the 14-year paper dipped half a basis point to 7.3 percent.
Non-resident accounts have bought nearly 75 billion rand ($9.2 billion) worth of bonds since the start of the year, and the Reserve Bank said last week this should persist for some time as portfolios adjust to the WGBI inclusion.
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