JOHANNESBURG, Sept 21 (Reuters) – South Africa’s government
bonds extended the previous day’s gains on Friday, pulling
yields to 1-1/2 week lows as market players bet on rates staying
at multi-decade lows for some time after a dovish central bank
policy statement.
The rand gained as much as 1 percent against the dollar,
partly tracking a stronger euro, although lingering labour
unrest in the mining sector could come back to haunt the local
currency.
The yield on the three year benchmark fell four
basis points to end the week at 5.37 percent while the
longer-dated 2026 issues was down eight basis points at 7.445
percent.
“There’s been reasonably good buying of the back end-bonds
— generally the market is reading that the monetary policy
committee speech was more dovish than expected yesterday,”
said Mark Southworth, a bond trader at Citi.
“U.S. Treasuries are also stronger, so we’re following them
and the dovish-ness of the central bank Governor yesterday means
that people like the 10-year area and longer.”
The Reserve Bank kept interest rates on hold as expected on
Thursday but was downbeat on domestic growth prospects,
prompting some traders to price in the chance of a rate cut in
November.
The rand hit a session high of 8.2271 to the
dollar, and was at 8.2460 by 1611, up 0.83 percent from
Thursday’s close.
Analysts said the currency was enjoying a reprieve following
resolution of a dragged-out wage dispute at Lonmin
that had weighed on sentiment in recent weeks, but that
this might be temporary as wage-related strikes spread to other
mining firms.
South Africa’s financial markets will be closed on Monday
for the Heritage Day public holiday.
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