JOHANNESBURG Oct 24 (Reuters) – South African government
bonds were weaker on Wednesday after higher-than-expected
inflation data, while the rand stayed in a narrow range as the
market awaits the medium-term budget policy statement (MTBPS) on
Thursday.
The rand was at 8.7650 to the dollar at 1534 GMT,
barely changed from Tuesday’s New York close, after dipping as
low as 8.8250.
The yield on the benchmark 3-year bond rose 5 basis points
to 5.46 percent while that on 14-year paper gained 6 basis
points to 7.71 percent.
South Africa’s headline consumer price inflation accelerated
to 5.5 percent year-on-year in September, from 5 percent in
August, Statistics South Africa said on Wednesday. Economists
had expected prices to rise by 5.2 percent.
“There’s definitely a weakness in the market because of the
worse-than-expected inflation print,” said Garth Klintworth,
head of fixed income, commodities and currencies at Absa
Capital.
He said the rand was likely to remain on the back foot ahead
of Finance Minister Pravin Gordhan’s budget statement on
Thursday due in part to concerns about an increase in social
spending.
“It’s just how expansionary will the budget be,” he said. “I
think people are potentially questioning the minister’s
credibility. For so many budgets he’s presented fantastic
numbers but we haven’t been able to live up to any of them.”
Klintworth said the rand should trade in the 8.70-9.00 range
for the rest of the week.
(Reporting by Tosin Sulaiman; editing by Stephen Nisbet)
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