JOHANNESBURG Feb 6 (Reuters) – South Africa’s rand
retreated from last week’s five-month highs against the dollar
on Monday, having posted its best weekly performance since
December, with uncertainty over a bailout for debt-ridden Greece
weighing on investors’ risk appetite.
Government bonds also pulled back, although support should
come from foreigners attracted by the relatively high yields on
local debt.
Yields rose on Monday, with both the three-year bond
and the 2026 issue each adding five basis
points to 6.48 percent and 8.135 percent respectively.
By 0656 GMT, the rand was at 7.5780 to the dollar,
a 0.77 percent decline from Friday’s close at 7.5200.
From being the best performer on Friday among 20 emerging
market currencies monitored by Reuters, the rand was second
worst on Monday after the Polish zloty, although the two
currencies have rallied the most against the greenback so far
this year.
“Technically, dollar-rand has been oversold for a long time
now and one could be forgiven for thinking that it needs to take
a breather,” Tradition Analytics said in a note.
“This week may be the week when the pair eventually stalls,
but we would wait for confirmation of that before turning the
view held for the past two weeks, especially with the
fundamentals abroad holding the potential to boost sentiment.”
The rand’s recent gains have in large part been due to
favourable economic data out of the U.S., which has boosted
emerging market sentiment, including better-than-expected jobs
numbers on Friday.
But on Monday the local currency tracked the euro, which
slipped as Greek coalition parties dithered on approving the
terms for a new bailout with a deadline just hours away, raising
worries the whole rescue scheme could flop.
(Reporting by Stella Mapenzauswa; Editing by Ed Cropley)
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