* Rand resistance seen 8.30 on euro uncertainty
* Bonds strengthen, yields at 2-1/2 week lows
JOHANNESBURG, June 6 (Reuters) – South Africa’s rand rallied
1.5 percent against the dollar on Wednesday as investors
welcomed European efforts to pull Spain out of its debt crunch,
but continued worries about euro zone debt problems should cap
any further significant gains.
Government bonds followed suit, with strong demand seen
particularly on the longer end of the curve, narrowing the yield
spread on the three and 14-year benchmarks from recent highs.
The yield for the bond due in 2015 shed seven
basis points to 6.27 percent while that for the 14-year paper
fell 11 basis points to close at a 2-1/2 week low of
8.29 percent.
“(The bond rally) is mainly in response to speculation that
European economies may be coming up with some sort of response
to the euro zone crisis so you’re seeing the euro recover and
the rand recover and that’s giving a bit of support to bonds,”
Renaissance BJM bond trader Alvin Chawasema said.
“The R186/R157 spread had widened to around 205 points and
has come back to about 202 points. Investors are looking at
picking up some stock at the longer end of the curve, probably
taking advantage of the wider levels that the spread had
reached.”
The rand notched its third consecutive daily gain
against the greenback, touching a week’s high of 8.3070.
It was at 8.3095 by 1612 GMT, up 1.49 percent from Tuesday’s
close at 8.4350, and making it the fourth strongest performer in
a basket of 20 emerging market currencies monitored by Reuters.
Continued…
