* Carry trades should support rand
* Bonds weaker, market cautious ahead of rates call
JOHANNESBURG, March 27 (Reuters) – South Africa’s government
bonds weakened for the first time in three days and the rand
reversed earlier gains against the dollar on Tuesday, although
the currency’s carry trade appeal could boost it in the short
term.
The rand earlier rallied to 7.5484 to the
greenback, its firmest level since March 20, but retreated to
7.5980 by 1541 GMT, weakening 0.21 percent from Monday’s close
at 7.5820.
“The rand has been somewhat range bound today, trading
between the low 7.54’s and the current levels,” said William Van
Rijn, a forex trader at Nedbank, calling Tuesday’s session
rather lacklustre.
“Locally the focus will be on the outcome of the monetary
policy committee on Thursday , and perhaps more specifically on
the comments from the Governor.”
All 24 economists polled by Reuters last week expected the
Reserve Bank’s MPC to keep the key repo rate unchanged at 5.5
percent – its stance over the last 16 months – but the market
will be looking for a signal from Governor Gill Marcus’s speech
of when monetary tightening could resume.
Government bonds fell earlier this month after comments from
Marcus suggested a tougher stance on inflation and some market
players are seeing higher interest rates by year-end, despite
data showing CPI slowed unexpectedly in February.
Bonds were sold on Tuesday, pushing prices lower and nudging
the yield on the benchmark three-year bond four basis
points higher to 6.79 percent. The yield for the 14-year paper
added 5.5 basis points to 8.43 percent.
Continued…
