JOHANNESBURG Aug 21 (Reuters) – The rand rebounded against
the dollar on Tuesday, and was the third-best performer in a
basket of emerging market currencies, as fears of more violence
at South African mines ebbed and hope of a solution to euro zone
debt problems boosted risk appetite.
Receding fears that last week’s violence at Lonmin’s
ONJ.J mine might spread to other mines in the world’s
largest platinum producer supported South African assets across
the board, with government bonds drawing strong bids at a weekly
auction.
The rand climbed as much as 1.4 percent to a session high of
8.2118 to the dollar on Tuesday. By 1600 GMT it was trading at
8.2450 up 1.08 percent from Monday’s New York close and
recovering most of the 1.3 percent it lost between last
Thursday, when the violence at the Lonmin mine escalated, and
Monday’s close.
The rand is also heavily influenced by swings in global risk
appetite, which rose on Tuesday on hopes the European Central
Bank will soon take action to contain the euro zone debt crisis.
The local currency recorded the third-biggest daily gain
against the dollar among 20 emerging market currencies tracked
by Reuters, trailing only the Hungarian forint and the
Czech crown.
“The Lonmin fears have been put on the back burner for now,
allowing South African government bonds room to renew their
strength, while the rand pressure abates and the unit takes its
cue from the global backdrop,” said Anisha Arora, emerging
market analyst at 4CAST.
South African government bonds edged higher and yields
inversely closed lower from Monday’s levels, with the yield on
three-year paper shedding five basis points to 5.57
percent and the yield on the 14-year issue down four
basis points at 7.555 percent.
“Today’s solid auction certainly played a role – it gave the
market more conviction to extend the strength from yesterday,”
said Di Luo, an interest rate strategist at HSBC in London.
The National Treasury sold a total of 2.1 billion rand
($252.83 million) of its 2023, 2036 and
2048 bonds on Tuesday, attracting strong bid-to-cover
ratios of 7.1, 4.5 and 3.2 respectively.
(Reporting by Stella Mapenzauswa; Editing by Susan Fenton)
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