Johannesburg - The rand weakened on Thursday while
government bond yields climbed in line with global debt market trends amid a deteriorating
inflation outlook due to rising oil and food prices rises.
However, the sell-off of local debt was partly off-set by
steady demand from fund managers that track Citigroup's influential World
Government Bond Index, which South Africa is set to join in October.
The yield on the heavily traded 14-year government bond rose
four basis points to 7.61% in early trade, and that for the three-year bond
added three basis points to 5.71%.
“It’s all in line with what’s happening internationally
where the US tenure and all other yields across the world are rising as the
global inflation picture worsens,” said Marten Banninga, head of bond trading
at WWC Securities.
“Also the statement by Finance Minister Pravin Gordhan that
domestic growth will be lower than current estimates is a clear indication than
government funding may need to increase this year.”
The Treasury in February forecast growth of 2.7% for 2012
but Gordhan reiterated during a visit to Argentina this week that output might
undercut the estimate as a downturn in Europe weighs.
By 06:59 GMT the rand was 0.43% weaker at R8.2725 against
the dollar, pulling away from recent three-month highs as waning expectations
of policy easing in the US boosted the greenback against most major currencies.