Johannesburg – South African bonds
were off their best level in afternoon trade on Thursday even though
the International Monetary Fund (IMF) said moderating inflation in SA
allowed room for rate cuts.
“We were stronger at midday and the
IMF statement had no impact as the market has already priced in some
more easing‚” a local bond trader said.
At 15:52‚ the benchmark R157 bond was
trading at 5.490% from a best level of 5.430% and 5.510% late on
Wednesday. The R207 was bid at 6.605% and offered at 6.580% from
6.630%‚ and the R186 was trading at 7.460% from 7.495%.
The rand was bid at R8.2948 per dollar
from R8.2261 at Wednesday’s close and R8.2516 at Tuesday’s close.
The IMF estimated SA’s economic
growth will moderate to 2.6% this year‚ it said on Thursday‚
following a visit by its directors to the country.
The global lender expected growth to
gradually recover over the medium term to its potential rate of about
The IMF said government debt was still
manageable and did not pose any threat to fiscal sustainability.
However‚ it warned that SA’s fiscal
space to cope with future shocks had “declined considerably”.
SA’s exposure to the global economy
meant any deterioration there would affect the country negatively‚
the IMF said.
It noted that if the external
environment were to worsen further‚ the resulting moderation of
inflation would allow the Reserve Bank greater room to respond.
Inflation unexpectedly fell to 4.9%
year on year last month from 5.5% in June.
The IMF praised SA’s financial
institutions‚ referring to them as “well-capitalised” and
liquid. Banks’ non-performing loans had partly recovered from the
effects of the financial crisis‚ it added.
IMF directors expressed deep worry over
the country’s high unemployment rate‚ saying that if not
addressed‚ the “stubbornly high” unemployment rate could become
politically and socially unsustainable.
It suggested the country needed to
build on its many policy successes to expand employment
opportunities‚ secure better education and health outcomes‚ and
build more efficient infrastructure to support inclusive growth‚
while maintaining macroeconomic and financial stability in a risky
Foreigners sold a net R1.184bn of South
African bonds including repo transactions on Wednesday‚ after net
purchases of R726.660m of local bonds on Tuesday‚ data released by
the JSE show.
Nominal cumulative volume was R51.402bn
on Wednesday from R195.039bn on Tuesday.
Foreigners were net sellers of R1.229bn
of local bonds excluding repo transactions on Wednesday after net
purchases of R754.267m of local bonds on Tuesday.
For the year to date foreigners have
been net buyers of R63.774bn of local bonds‚ excluding repo
transactions. In 2011 they were net buyers of R47.359bn worth of
local bonds‚ excluding repo transactions.
In the year to date foreigners have
been net buyers of R62.876bn of local bonds including repo
transactions. In 2011 they bought R37.501bn worth of local bonds.