* Rand weakens against dollar but should firm next week
* Bonds end slighty weaker on lower currency
JOHANNESBURG, March 2 (Reuters) – The rand fell over
one percent against the dollar on Friday, pulling further back
from 2012 highs hit earlier in the week as the dollar gained
against a basket of emerging market currencies.
Analysts however expected the local unit back on a firmer
trend in the near term as carry trades support risky assets,
saying the rand was merely responding to intra-day risk averse
sentiment in Friday’s session.
Investors are expected to use cheap money provided by the
European Central Bank earlier this week to buy into riskier,
higher yielding assets like the rand.
The local unit was down 1.3 percent to 7.54 against
the dollar in Friday’s session, pulling back further from the
2012 high of 7.4020 hit on Wednesday and dropping along with
most emerging market currencies traded against the dollar and
watched by Reuters.
It closed at 7.44 in New York on Thursday.
“The rand has taken a while to come back from a sell-off
yesterday afternoon. It reacts quickly to risk-sentiment, but a
week and two weeks from now we expect it to firm on the ECB
liquidity injection,” a currency analyst said.
The rand hit its 2012 high on Wednesday when risky assets
were boosted by reports of a three-year liquidity injection from
the European Central bank and dealers see those gains continuing
next week.
Government bonds closed slightly higher. Yields on the
benchmarks were down one basis point to 6.67 percent on the 2015
issue and 8.295 percent on the 2026 bond.
(Reporting by Xola Potelwa; editing by Ron Askew)
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