JOHANNESBURG, July 2 (Reuters) – South Africa’s rand briefly
touched a fresh 1-1/2 week high against the dollar early on
Monday but looked unlikely to rally much further as uncertainty
remains over Europe’s liquidity problems.
The rand initially climbed to 8.1525 against the
greenback, its strongest level since June 20, before coming back
to 8.1850 by 0651 GMT, down 0.26 from Friday’s close.
The local currency jumped as much as 2.7 percent against the
dollar on Friday, recording its biggest daily gain since late
November 2011, as renewed optimism about a solution to Europe’s
debt problems fired up risk appetite.
But the rand remains vulnerable to any new bouts of
disappointing news out of the euro zone, South Africa’s main
trading partner bloc, Tradition Analytics cautioned.
“Investors should be wary in believing that the latest bout
of rand strength will be sustained indefinitely,” it said.
“Whilst the local unit may gain even more ground in the
short term, the situation abroad is very fluid.”
On the local front, the June purchasing managers’ index due
out at 0900 GMT should offer the latest pointers on the state of
South Africa’s economy, with some market players now pricing in
the chance of an interest rate cut later in the year to boost
growth.
Government bonds were unchanged from Friday’s levels in
early Monday trade, with the yield on the benchmark three-year
bond steady at 6.01 percent as was the longer-dated
2026 paper at 7.935 percent.
(Reporting by Stella Mapenzauswa)
© Thomson Reuters 2012 All rights reserved
