JOHANNESBURG, Sept 20 (Reuters) – South Africa’s rand edged
higher against the dollar and bond yields ticked up on Thursday
after the Reserve Bank kept interest rates on hold as expected.
But the dovish tone of the central bank’s policy statement
left some traders seeing some chance of a cut at the Bank’s last
meeting of the year in November.
The rand was at 8.3230 to the dollar at 1615 GMT,
down 0.61 percent on the day but up from a low of 8.38 reached
during Reserve Bank governor Gill Marcus’s speech.
Benchmark government bond yields edged up after Marcus kept
the repo rate steady at 5.0 percent, with the 3-year bond
closing the day at 5.41 percent from 5.4 before the
announcement, a gain of 1.5 basis points on the day.
The yield for the longer-dated 14-year issue crept
higher to 7.525 percent from 7.51 percent before the rates
announcement.
The Reserve Bank cut its 2012 growth forecast to 2.6 percent
from the 2.7 percent predicted in July, saying Africa’s biggest
economy was expected to remain weak because of poor global
growth and disruptions to mining output.
Inflation was expected to remain within the target range but
the Bank saw the rand exchange rate as a potential risk
particularly “in the event of an unsustainable widening of the
current account deficit”.
“The statement in general was a little bit more dovish than
most market players anticipated and the curve steepened on the
back of that,” said Marten Banninga, head of bond trading at WWC
Securities.
“I think trade will be (biased) towards an emphasis for a
cut in the future.”
The Reserve Bank said the rand had been underpinned to some
extent by continued inflows to the debt market in the lead-up to
South Africa’s inclusion in the Citibank World Government Bond
Index (WGBI) next month.
Non-resident purchases of South African bonds since the
previous meeting of the MPC in July amounted to 12.1 billion
rand and were expected to persist for some time.
(Reporting by Stella Mapenzauswa; Editing by Ruth Pitchford)
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