JOHANNESBURG, March 26 (Reuters) – The South African rand
was off last week’s four-week lows against the dollar on Monday
but remained on the back foot, with renewed worries on China’s
growth prospects likely to weigh on commodity currencies
overall.
Government bonds edged higher, extending last week’s gains
as investors, who are now seeing a lesser chance of domestic
interest rate cuts this year, buy back into local debt.
The yields on the benchmark three-year and 14-year
paper each shed a basis point to 6.82 percent and 8.45
percent respectively.
“There was a lot of short-covering last week, with about 2.5
billion rand bought by foreigners on Friday, so there’s
definitely been good demand after CPI came out lower than
expected,” a Johannesburg bond trader said.
“A lot of guys were pricing in rate hikes before that and
that’s reversed aggressively.”
By 0647 GMT the local currency was at 7.7030 to the
greenback, a loss of 0.3 percent from Friday’s close.
“Resurgent concerns over China’s growth has commodity prices
and commodity currencies under pressure this morning,” Standard
Bank strategist Nomvuyo Guma said in a note.
The rand should however find support around the 7.75
percent level, after failing to push beyond that both on
Thursday and on Friday, when it bounced back to close at 7.68.
“(This) could imply that the bearish momentum that
characterized most of last week’s trade has run out of steam,”
said Absa Capital.
(Reporting by Stella Mapenzauswa; editing by David Dolan)
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