Rand tracks euro to strongest level in weeks
THE RAND gained as much as 1.4 percent against the dollar yesterday to its strongest level in nearly three weeks, tracking a firmer euro and on course for its biggest weekly gain since April.
Government bonds also soared to threeweek highs, with benchmark yields falling about 14 basis points as investors bought into South Africa’s liquid debt market which offers higher returns than those in developed economies. The rand briefly touched a session high of 7.9727 to the greenback, its firmest level since November 14, before pulling back to 8.0284 by 1548 GMT.
“The rand took its cue from a stronger euro. Sentiment remains cautiously optimistic,” a rand dealer in Johannesburg said, alluding to a summit next week where EU leaders will make a further attempt at tackling the bloc’s sovereign debt crisis.
Finance Minister Pravin Gordhan warned that failure by Europe to resolve the crisis would have “massive consequences” for the global outlook, saying the rapid flow of capital in and out of emerging markets was having major disruptive effects.
Yesterday the yield on South Africa’s four-year bond dropped 14 basis points to 6.62 percent while that on the 2026 was down 13.5 basis points at 8.325 percent. – Reuters