* Rand support at 7.83/4 area
* Bonds weaker, eyes on PMI at 0900 GMT
JOHANNESBURG Feb 1 (Reuters) – South Africa’s rand
steadied against the dollar on Wednesday and could keep a firmer
tone on the back of high metal prices but sentiment is still
fragile.
Government bonds were largely unchanged with the market’s
eyes on PMI data out at 0900 GMT. The PMI slipped back into
contractionary territory in December at 49.4, an indication that
this key sector is still struggling.
Another reading below 50 would suggest interest rates may
have to remain lower for longer and be supportive of bonds.
The rand was trading at 7.81 to the dollar at 0640
GMT, not far from Tuesday’s New York close of 7.82.
“What we are seeing is a continuation of last week’s risk-on
scenario and commodity currencies are doing well,” said Jim
Bryson, chief dealer at Rand Merchant Bank.
“We are a higher yielding currency and the world is
semi-stable so on that basis foreigners are looking to come back
to the rand.”
The rand might weaken a bit but as long as it does not break
support at 7.84 it will remain in ranges, he said.
Continued…
