* Rand dips as data shows lower forex reserves
* Bonds weaker, auction to indicate market appetite
JOHANNESBURG May 8 (Reuters) – South Africa’s rand weakened
against the dollar on Tuesday as data showed foreign exchange
reserves fell in April and continued worries about euro zone
debt problems kept pressure on emerging market assets seen as
carrying higher risk.
However, comments by Reserve Bank Governor Gill Marcus that
the inflation trend suggests there is little room to cut
interest rates should support the rand by attracting offshore
investors in search of yield.
By 0704 GMT the rand was trading 0.34 percent
weaker at 7.8265 against the dollar from Monday’s close at
7.80.
“It’s a quiet start. We should see bids at the 7.80/7.79
level. Buying dips is still the way to go after the sell-off we
had yesterday,” said Jan Defouw, a trader at Standard Bank.
The unit was at 7.8150 before a central bank report at 0600
GMT showed South Africa’s net gold and foreign exchange reserves
dipped to $48.823 billion in April while gross reserves
fell to $49.942 billion.
The decline was due to foreign repayments made on behalf of
the government, the Reserve Bank said. The Bank has previously
said it would take advantage of a stronger currency to boost
reserves, but insists it does not target a level for the rand.
Government bonds tracked the rand weaker, with yields for
the three-year benchmark and the longer-dated 14-year
paper each adding two basis points to 6.445 percent
and 8.17 percent respectively.
A weekly government bond auction at 0900 GMT, where the
Treasury is offering 2.1 billion rand of paper, should give
pointers on market appetite for South African debt.
(Reporting By Tshepo Tshabalala; Editing by Stella Mapenzauswa)
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