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Bonds weaker on softer rand

Johannesburg - South African bonds were a few basis points weaker in midday trade on Monday, on the back of the weaker rand.

By 11:50, the benchmark R157 bond was trading at 6.450% from its previous close of 6.435%. The R207 was bid at 7.840% and offered at 7.835% from a previous close of 7.800%, and the R186 was trading at 8.300% from its close of 8.275%.

The rand was bid at 7.9747 against the dollar from its previous close of 7.8966.

"We saw some sellers this morning but once the Transnet auction was out of the way it settled down a bit. We're pretty much just tracking the rand - it's very, very quiet," a trader noted.

This week sees the SA Reserve Bank's monetary policy committee (MPC) meeting, which ends on Thursday with the announcement of the interest rates decision around 15:00.

The repo rate is expected to remain unchanged, according to a survey of nine leading economists by I-Net Bridge.

Of the nine economists surveyed, only one expected a rate cut of 50 basis points.

The rate was cut by 50 basis points to 5.5% in November 2010. This was the lowest reading in almost 30 years and resulted in a real interest rate of about 1%.

Rates were earlier this year forecast to start rising on the back of increasing inflation, but slowing global and local economic growth put a break on those expectations.

The bank has already reduced the repo rate by 650 basis points since December 2008.

Foreigners were net buyers of R694.949m of South African bonds including repo transactions on Friday after net purchases of R3.889m of local bonds on Thursday, data released by the JSE show.

Nominal cumulative volume was R67.308bn on Friday from R81.954bn on Thursday.

Foreigners were net buyers of R694.375m of South African bonds excluding repo transactions on Friday after net purchases of R6.636m of local bonds on Thursday.

For the year to date, foreigners have been net buyers of R45.828bn worth of local bonds, excluding repo transactions. In 2010 foreigners bought net R57.064bn worth of local bonds, excluding repo transactions.

For the year to date for total transactions, including repo transactions, foreigners have been net buyers of R37.488bn of local bonds. In 2010 they bought net R44.541bn worth of bonds.

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18.94
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23.93
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