JOHANNESBURG Dec 1 (Reuters) – South Africa’s rand
was slightly firmer against the dollar on Tuesday and government
bonds also edged higher, but worries about the euro zone credit
crisis were likely to limit gains.
The rand was up 0.32 percent at 8.37 to the
greenback by 0653 GMT after ending Monday’s session at 8.3970.
“The rand will struggle to rally back to levels more in line
with South African fundamentals whilst a major credit crunch is
unfolding abroad,” Tradition Analytics said in a note to
clients.
“It is safe to say that the credit crunch is elevating risk
and withdrawing liquidity from emerging markets whose currencies
would otherwise be trading at far stronger levels than is the
case at the moment.”
The rand has been hit by heightened global risk aversion,
particularly in the second half of this year, as investors worry
about the impact of a sovereign debt crisis affecting some euro
zone nations.
The domestic currency is on track to end the year more than
20 percent weaker against the dollar, which would be its worst
annual performance since 2008.
South Africa’s government bonds were firmer on Tuesday, and
yields fell in tandem.
The yield on the four-year bond was down three
basis points at 6.91 while that on the longer-dated 2026
was down five basis points at 8.655 percent.
(Reporting by Stella Mapenzauswa; editing by David Dolan)
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