* Rand benefits as dollar weakens
* Bonds weaker, PPI boost not enough
JOHANNESBURG Feb 23 (Reuters) – South Africa’s rand
gained against the dollar on Thursday,
taking its cue from a euro that hit multi-week highs on German
data that eased concerns about growth in the euro zone.
Government bonds extended losses, still smarting from supply
worries as the market was unconvinced that government’s narrower
budget deficit targets in Wednesday’s budget were realistic.
Bonds were off session lows though after softer than
expected PPI data that showed producer inflation slowed more
than expected to 8.9 percent year-on-year in January.
The rand hit a session high of 7.6640 to the dollar
earlier, and was last trading at 7.6912, 0.53 percent firmer
than Wednesday’s New York close of 7.7350.
“Dollar/rand has come down to the lower half of its
7.61-7.75 range but the inability of euro/rand to follow this
move indicates this it is a pure euro/dollar driven adjustment,”
said Gabor Ambrus, emerging market analyst at 4CAST.
The euro zone is South Africa’s largest trading partner and
the rand tends to follow the movements of the single currency.
The euro hit 10-week highs to the dollar earlier as German
business sentiment rose for the fourth month running in
February, raising hopes that Europe’s largest economy is
improving and will avoid recession.
Continued…
