* Government bonds rally on balanced inflation risks
* Rand turns attention to a better global risk environment
* Feb budget deficit widens year-on-year
By Vuyani Ndaba
JOHANNESBURG, March 30 (Reuters) – South Africa’s rand and
bonds firmed against the dollar on Friday as investors shifted
focus to a better global risk environment after a week that was
largely dominated by caution about a domestic interest rates
verdict.
Government bonds finished the jittery week on a firmer
footing, with the yield on the benchmark 2015 bond
dipping 9.5 basis points to 6.7 percent and that on the
longer-dated note 2026 falling 8.5 basis points to
close at 8.385.
“I think markets interpreted yesterday’s MPC statement as
less hawkish than was potentially priced into the market,” said
Steve Arnold at Investec securities.
The central bank left the repo rate unchanged at 5.5 percent
on Thursday, as expected, but more importantly it said the
outlook for inflation was marginally lower than at its previous
policy meeting while the outlook for domestic growth was
slightly more favourable.
Bonds also ignored potentially disappointing news on the
budget deficit, which widened to 138 billion rand ($17.8
billion) in the first 11 months of the financial year ending
March 2012 from a 132 billion rand shortfall over the same
period previously.
Continued…
