JOHANNESBURG, July 5 (Reuters) – South Africa’s rand was a
touch softer against the dollar while government bonds held at
multi-month highs on Thursday as the market digested dovish
Reserve Banks comments that suggested domestic rates will stay
at 30-year lows for some time.
The yield on the three year benchmark bond was
down two basis points at an all-time low of 5.94 percent while
that for the equally heavily traded 14-year paper was
at 7.83 percent, its lowest since early September 2011.
The Reserve Bank said in its annual report on Wednesday
inflation should stay contained within a 3-6 percent target
until the end of 2014, adding that the domestic growth outlook
had deteriorated.
“The comments are certainly supportive of a further push
lower in bond yields,” RMB said in a market note.
The rand was largely steady against the dollar in early
trade, losing some of the steam that had pushed it to its
strongest levels since mid-May earlier in the week.
By 0653 GMT the currency was at 8.1403/dolar,
little changed from Wednesday’s close at 8.1361.
The rand would take its cue largely from global currency
moves ahead of European Central Bank and Bank of England policy
meetings later in the day, as well as U.S. jobs data due out on
Friday, market watchers said.
Signs of further policy easing from developed countries
which are already sitting on near-zero rates could be supportive
of the local currency, Standard Bank trader Warrick Butler said.
“If there is cheap G7 cash going around then you have to
expect that a lot of it will flow into the high yielders such as
the rand,” Butler said.
(Reporting by Stella Mapenzauswa; Editing by Ed Cropley)
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