* Rand gains 1.5 percent vs dollar
* Yield on 2020 and 2015 bonds at record lows
* Credit growth surprises higher in May
JOHANNESBURG, June 29 (Reuters) – South Africa’s rand
rallied through resistance levels against the dollar early on
Friday, as positive news out of the euro summit propelled
investors back into riskier assets after a week of nervousness.
The rand briefly got an extra boost after data showed
higher-than-expected growth in South Africa’s credit and money
supply. The currency broke out of a week-long lethargy to rise
as much as 1.5 percent against the dollar to 8.2775, compared to
a 8.4010 close overnight.
European leaders boosted markets by taking unexpected
decisions such as lowering Spanish and Italian borrowing costs.
Investors had cut their expectations that the European
summit would deliver any positive developments, making the
announcements a much needed boost for risk appetite.
Local dealers came into the session and sold off some
dollars. The rally extended to the session’s high after central
bank data showed credit extended to the private grew by to 8.31
percent compared 7.33 percent in April, beating market
expectations of 8 percent growth.
“All of risk is much stronger overnight on the news out of
the European summit. We’ve seen a lot of unwinding of short risk
positions and long dollar positions and that’s seen dollar/rand
strengthen quite aggressively,” said Duncan Howes, a currency
dealer at Absa Capital.
Continued…
