* Rand, govt bonds still propped by bond index ascension
* March inflation expected to have eased slightly
* February retail sales forecast at 4.8 pct from 3.9 pct
JOHANNESBURG, April 18 (Reuters) – Yields on South African
government bonds were lower early on Wednesday, with prices
propped up by news that billions of dollars could come into the
market from abroad through the inclusion of local bonds in a
world bond index.
The rand was trading close to two week highs but had pared
most of its previous gains as investors, worrying about a
Spanish auction on Thursday, were cautious on risk.
Citigroup announced 11 government bonds would likely be part
of its World Government Bond Index (WGBI) on October 1, which
could potentially bring $5-9 billion worth of inflows into South
Africa.
Daily foreign buying of local bonds recorded its second
biggest trading volume on the news and the rand rapidly pierced
through technical resistance levels, closing at 7.8120 in New
York.
By 0635 GMT on Wednesday the currency was trading
around those levels, with a firmer bias.
The rand should continue to gain in the short term as strong
inflows have usually resulted in a strong currency.
Continued…
