* Rand best former in basket of EM currencies
* Trading volumes thin ahead of year-end
JOHANNESBURG Dec 20 (Reuters) – South Africa’s
government bonds edged higher while the rand jumped as much as
two percent against the dollar in thin year-end trade on
Tuesday, tracking gains in the euro after a well-supported
Spanish debt auction.
The rand scaled a near-week high of 8.2191 to the
greenback, making it the best performer among 20 emerging market
currencies monitored by Reuters, and was up 1.75 percent at 8.25
by 1552 GMT compared with Monday’s close at 8.3970.
“The main factors today were the very strong Spanish auction
this morning where yields came down substantially from prior
auctions,” ETM market analyst Chris Becker said, adding this
boosted risk sentiment, battered in recent months by worries
over the indebtedness of some euro zone states.
“There were some very strong housing figures out of the U.S.
as well and so the dollar is coming under pressure. I would say
it’s possible that we go below 8.00/dollar again (before
year-end).”
Government bonds were also firmer, with data from the
Johannesburg securities exchange showing foreign demand for
local debt remains fairly strong.
The yields on the four-year bond and the
longer-dated 2026 were each down two basis points at
6.89 percent and 8.635 percent respectively.
Foreigners have bought a net 48.8 billion rand ($5.82
billion) worth of South Africa’s high yielding bonds so far this
year, although this is down from 66 billion rand over the same
period in 2010.
Despite the bond flows, the rand is still down more than 23
percent against the greenback so far this year, hit by
heightened global risk aversion particularly in the second half
of this year, on fears of global contagion from the debt crunch
in Europe.
($1 = 8.3836 South African rand)
(Reporting by Stella Mapenzauswa; editing by Ron Askew)
© Thomson Reuters 2011 All rights reserved
