* Marcus says WGBI inclusion boosting bonds
* Weak global outlook weighs on domestic growth
* Central bank does not target rand exchange rate
(Adds details, background)
JOHANNESBURG, Oct 2 (Reuters) – The current levels of
foreign flows into South Africa’s bond market are not
sustainable although demand should continue for some time,
boosted by inclusion in Citi’s World Government Bond Index,
Reserve Bank Governor Gill Marcus said on Tuesday.
Speaking to a meeting of the Nordic-South African Business
Association, Marcus also reiterated her stance that the central
bank did not target a exchange rate for the rand or the level of
foreign currency reserves because of the cost of doing so.
Africa’s biggest economy had seen about 84 billion rand
($10.10 billion) of bond purchases by foreign accounts since the
start of the year, driven partly by demand linked to the WGBI
inclusion, Marcus said.
Twelve government bonds debuted on the index on Monday,
putting South Africa alongside 22 other countries on the WGBI,
which is tracked by funds worth an estimated $2 trillion.
Local bonds have rallied in the months leading to the
inclusion, and on Tuesday yields on the heavily traded three
year and 14-year paper were down as much as nine basis
points from overnight levels.
“I don’t think (inflows) can be sustained at these levels
but the expectation is that over the foreseeable future you’re
going to have inflows,” Marcus said.
Continued…
