Rand leads declines on dollar-buying talks

THE RAND led declines against the dollar yesterday amid speculation that the Reserve Bank increased dollar purchases, while bond yields hit two-month highs as the Federal Reserve raised its outlook for the US economy.

At 5pm, the local currency was bid at R7.6671 to the dollar, 11.80c lower than on Tuesday.

This drop is the most out of 25 emerging market currencies monitored by Bloomberg.

Yields on the government’s 13.5 percent bonds due 2015 climbed to their highest level since January 13.

“Market talk suggests that the Reserve Bank has become more active in mopping up some dollars towards R7.50” a dollar, said ETM Analytics economist George Glynos.

Central bank activity “should leave the downside reasonably well-contained and the dollar-rand continuing to trade in a R7.48 to R7.60 range,” Glynos added.

The central bank’s gross foreign exchange and gold reserves advanced 0.9 percent in February from the previous month to $51.9 billion (R397.9bn) as the price of gold surged and the dollar weakened, boosting the value of other foreign currencies, the Reserve Bank said last week.

Sales growth slowed to 3.9 percent from 8.7 percent a month earlier, Statistics SA said yesterday, while sales fell 0.6 percent, with the annual rate being the lowest since July.