* Rand makes convincing break past 7.90 vs dollar
* Bond yields at two month lows
JOHANNESBURG Jan 26 (Reuters) – The rand neared a
three-month high against the dollar on Thursday, breaking
through tough resistance as a global risk rally saw investors
turn to higher-yielding assets, pushing South Africa bond yields
down 19 basis points as well.
Global markets were buoyed by positive data out of the
United States and signals from the U.S. Federal Reserve that
interest rates would remain near zero for another few years.
The rand gained 1.4 percent against the dollar to
7.7785 on the day, a level last seen on Oct. 31. The local unit
has broken through 8 rand to the dollar and then 7.90 resistance
this week but could have its gains capped by good two-way
interest.
“There are lots of importers around and probably
some exporter panic as well so activity is quite decent,” said
Ion de Vleeschauwer, dealer at Bidvest Bank.
“I think the South African Reserve Bank will probably buy
some dollars at these kind of levels as well to prop up their
reserves, but overwhelming positive news is just forcing the
rand continually stronger despite all the importer demand,” de
Vleeschauwer added.
Market players speculated the central bank had been in the
market to build up its dollar reserves, prompting the rand to
retreat from its highest levels but the amounts were
insignificant and the move was countered by risk-on sentiment.
Bond yields fell to two-month lows as prices rallied in
tandem with the currency.
“The bond market has been a little crazy, rallying by just
under 20 points today and the curve is heading back to where it
started the year – steeper,” a local bond dealer said.
The yield on the 2015 bond ended at 6.465 percent,
down from 6.65 percent on Wednesday while the longer 2026 issue
ended at 8.215, down from 8.36 percent previously.
(Reporting by Xola Potelwa; Editing by Susan Fenton)
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