* Rand firms vs dollar on exporters, risk sentiment pick-up
* Government bonds follow currency but gains seen limited
JOHANNESBURG Jan 23 (Reuters) – South Africa’s rand
gained against the dollar in afternoon trade on Monday,
reversing earlier losses as exporters sold the greenback close
to the 8 rand level and as investors hoped Greece would find a
solution avoid a messy default.
Yields on government bonds were down as prices rose slightly
to follow the firmer rand, but dealers see the gains as limited
especially on the shorter end of the curve as investors fret
rising inflation in the local economy.
The rand was 0.44 percent firmer against the dollar
at 7.91 by 1541 GMT, compared to a 7.9450 close on Friday.
Euro zone finance ministers are meeting on Monday to decide
on the terms of a Greek debt restructuring deal and investors
appear to be optimistic, steadily picking up risky assets.
“It does look like its a function of pent up demand for
riskier assets,” said Richard Farber, a trader at WWC Securities
in Johannesburg.
The 2015 bond yield dropped 4 basis points to 6.67
percent while the 2026 issue gave up 2.5 basis points
to 8.33 percent.
“And assuming that you get positive sentiment regarding the
Greek discussions and a general softening of concerns
surrounding the euro zone sovereign debt crisis, I would imagine
the rand would continue to be better bid but I can’t see bonds
being too aggressive,” Farber said, adding that the U.S. ten
year bond yield had risen.
Continued…
