The rand edged towards a four-month high against the dollar in thin Friday trading as the British royal wedding kept London markets closed.
|||South Africa's rand edged towards a four-month high against the dollar in thin Friday trading as the British royal wedding kept London markets closed, boosted mainly by higher investor appetite for high-yielding currencies.
Government bonds however stumbled and yields rose as the market increasingly prices in higher domestic interest rates by year-end to fight inflation, while stocks edged up in line with global counterparts.
The rand rallied to a session high of 6.57, its strongest level since Jan. 3, before retreating to 6.5833 by 1545 GMT, still up 0.22 percent on the day.
“There was pretty low liquidity today as London was off but the persistent gold price rally, mildly positive risk appetite and a generally weaker dollar helped dollar/rand slide further,” said Gabor Ambrus, emerging market analyst at 4CAST.
“It seems the SARB (South Africa Reserve Bank) is not inclined to be as active as it was in January/February. I guess they need a stronger rand to keep inflation in check and delay a rate hike as much as possible,” he added.
The rand slid about 10 percent against the dollar at the start of this year, partly on more aggressive central bank accumulation of foreign reserves to curb its strength after gaining nearly 12 percent in 2010.
The local unit will have to pierce the Jan. 3 high of 6.55/dollar to target the late 2007 high of 6.43. Charts however suggest it will meet some resistance at 6.58.
Prospects of higher rates in the fourth quarter weighed on local debt on Friday, and the yield on the 2015 note edged up two basis points to 7.65 percent while that for the longer-dated 2026 note added 3.5 basis points to 8.69 percent.
The All-share index inched up 0.26 percent to 32,745.56, mirroring European markets, with retailer Massmart among the leaders after rising 2.13 percent to 144.00 rand.
Massmart was lifted by news a Namibian court had quashed a competition watchdog ruling that placed local conditions on Wal-Mart's planned takeover of it.
The judgment, awarded to Wal-Mart with costs, means the $2.3 billion acquisition of Massmart is now subject only to a decision by South African competition authorities. A hearing is scheduled for May 9.
Next week will be a short one because of the May Day holiday on Monday but the bourse will find direction from the rand, global commodity prices and a spate of earnings including a quarterly report for gold miner Harmony. - Reuters
Source: http://www.iol.co.za/rand-holds-firm-vs-dollar-1.1062863
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