* Local currency’s rally could be short-lived
* Resistance at 8.11 then 8.05, previous highs
* Bonds rally in tandem
JOHANNESBURG, July 26 (Reuters) – The rand surged 1.7
percent versus the dollar on Thursday, gaining with risky assets
globally after European Central Bank President Mario Draghi
pledged to do whatever was necessary to protect the euro zone
from collapse.
The rand gained to 8.2450/dollar in the session
-levels last seen on July 20 – before pulling back slightly to
8.26 by 1600 GMT, still well up from the close at 8.39 in the
previous session.
The demand for bonds increased in Thursday’s session,
pulling yields close to record lows in a volatile week.
“The market has taken Draghi’s comments as very very
positive and it was a ‘risk on’ event. It’s difficult to say the
longevity of it because you have to see exactly what he means by
it,” said Malcolm Charles, fixed income portfolio manager for
Investec.
ECB President Mario Draghi earlier in the session reassured
markets that the Bank would do whatever it takes to preserve the
single currency, causing investors who had sought cover against
risk to buy back high yielding emerging market assets.
“They’re strong comments. One thing I’ve learnt from all the
European announcements is the devil is always in the detail,”
Charles cautioned.
Continued…
