* Rand needs to break 8.3 for sustained rally
* Bonds edge up, Treasury could list new paper soon
JOHANNESBURG, June 5 (Reuters) – The South African rand
touched a four-day high against the dollar on Tuesday and
government bonds closed firmer, pushing yields lower after a
well supported weekly Treasury auction.
Bonds held their ground despite news that the Treasury
may issue five new bonds as early as this week, helping to plug
a 10-year benchmark gap and extend the government yield curve by
a further seven years.
South Africa’s recent promotion into a major bond index has
fed interest among international investors in Africa’s largest
economy and biggest debt market.
The rand climbed to 8.4152/dollar, its strongest
level since May 30, but retreated to 8.4450 by 1524 GMT, a gain
of 0.54 percent over Monday’s 8.4910 close.
“The rand has performed very well today, strengthening from
the lower 8.50’s area to the lower 8.40’s. There seems to be
some steadying in the market,” RMB trader Jim Bryson said.
“The rand was really very oversold up towards 8.70, but we
are still very much euro-dependent. We would have to get through
the lower 8.30’s to totally change the overall tack and take the
pressure off completely.”
The rand has regained some of its poise this week after a
sharp decline to a three-year low last week, which capped losses
of nearly 9 percent in May as investors fretted that debt
problems bedevilling euro nations could hurt global growth.
Government bonds gained alongside the rand, partly boosted
by an auction earlier where the Treasury sold five-year, 24-year
and 29-year paper, attracting bid-to-cover ratios as high as
4.29.
Benchmark yields ended lower, with the three year paper
edging down 2.5 basis points to 6.34 percent while the
equally heavily traded 14-year issue dipped half a
basis point to 8.4 percent.
(Reporting by Stella Mapenzauswa; Editing by Ruth Pitchford)
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