JOHANNESBURG Aug 16 (Reuters) – South Africa’s rand
weakened on Thursday while government bond yields climbed in
line with global debt market trends amid a deterioriating
inflation outlook due to rising oil and food prices rises.
However, the sell-off of local debt was partly off-set by
steady demand from fund managers that track Citigroup’s
influential World Government Bond Index, which South Africa is
set to join in October.
The yield on the heavily traded 14-year government bond
rose four basis points to 7.61 percent in early trade,
and that for the three-year bond added three basis
points to 5.71 percent.
“It’s all in line with what’s happening internationally
where the U.S. tenure and all other yields across the world are
rising as the global inflation picture worsens,” said Marten
Banninga, head of bond trading at WWC Securities.
“Also the statement by Finance Minister Pravin Gordhan that
domestic growth will be lower than current estimates is a clear
indication than government funding may need to increase this
year.”
The Treasury in February forecast growth of 2.7 percent for
2012 but Gordhan reiterated during a visit to Argentina this
week that output might undercut the estimate as a downturn in
Europe weighs.
By 0659 GMT the rand was 0.43 percent weaker at
8.2725 against the dollar, pulling away from recent three-month
highs as waning expectations of policy easing in the U.S.
boosted the greenback against most major currencies.
(Reporting by Stella Mapenzauswa; Editing by Ed Cropley)
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