JOHANNESBURG, April 19 (Reuters) – South Africa’s rand and
government bonds slipped on Thursday, taking a break after sharp
rallies earlier in the week and as investors fretted about the
euro zone debt crisis.
The rand was 0.2 percent weaker against the dollar at 7.8630
by 1626 GMT, after closing at 7.8452 in New York on
Wednesday. Bond yields rose by 1.5 basis points.
Citigroup’s announcement on Tuesday that it may include
South African bonds in its World Government Bond Index (WGBI) in
October had boosted the rand and driven bonds to multi-year
highs.
While the boost from that news has largely worn off, it
still cushioned the rand from a bigger fall. However some in the
market expect the currency’s resilience to give in in a couple
of week’s time.
“The rand is outperforming the rest of the risky assets. Of
the commodity currencies the rand is being kept strong by that
WGBI story from Tuesday,” said Warrick Butler, a forex trader at
Standard Bank.
“(However) the cushion won’t last long at all,” Butler said,
citing concerns over Europe’s problems.
Local yields ended slightly higher with the three-year
benchmark at 6.52 percent and the 14-year at 8.18
percent. Dealers said increased demand for South
African debt since Tuesday’s announcement was keeping them very
busy and propping up the market.
(Reporting by Xola Potelwa; Editing by Hugh Lawson)
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