JOHANNESBURG, July 18 (Reuters) – South African bond yields
remained near record lows on Wednesday amid sustained foreign
buying and the rand held steady in anticipation of a central
bank interest rate decision on Thursday.
The yield on the 3-year bond rose to 5.765
percent, slightly above Tuesday’s record low of 5.72 percent,
while the 14-year paper was yielding 7.49 percent,
compared to a 3-year low of 7.41 percent earlier in the day.
The rand was barely changed at 8.1568 to the dollar at 1600
GMT after opening the day at 8.1625.
However, it could weaken temporarily if central bank
governor Gill Marcus announces a cut in the benchmark repo rate,
said David Gracey, head of currency and derivatives trading at
Investec.
“If she cuts we will see a bit of weakness initially,” he
said. “As more people enter the bond market, you could see the
rand strengthen.”
Jonathan Myerson, head of fixed income at Cadiz Asset
Management, said he expected foreign inflows into South Africa’s
bond market to persist, though there could be a slight slowdown.
“I think there’s good reason for them to continue to buy,
clearly not as aggressive as they have over the last six weeks
or so,” he said. “I don’t see any major selloff risk.”
Data released on Wednesday showed South Africa’s consumer
inflation slowed more than expected to 5.5 percent year-on-year
in June from 5.7 percent in May, while retail sales increased to
6.4 percent in May, compared with a revised 1.1 percent in
April.
(Reporting by Tosin Sulaiman)
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