• 10 tips to find bargains

    Susan Erasmus gives advice on how bargain hunters can get the most bang for their buck.

  • Inside Labour

    Labour's bitter breaches need to be seen in historical context, says Terry Bell.

  • Rich getting richer

    Economists differ on how to tackle the chasm between rich and poor, says Leopold Scholtz.

See More

Rand, bonds weaken ahead of MPC

Mar 27 2012 18:21

Related Articles

Bonds weaker after 'not great' auction

Rand and bonds steady

Rand gets boost from Bernanke comments

Bonds take positive lead from rand

Rand softer on economic growth concerns

Rand firms as it tracks steadier euro

Johannesburg - Government bonds weakened for the first time in three days and the rand reversed earlier gains against the dollar on Tuesday, although the currency’s carry trade appeal could boost it in the short term.

The rand earlier rallied to R7.5484 to the greenback, its firmest level since March 20, but retreated to R7.5980 in early evening trade, weakening 0.21% from Monday’s close at R7.5820.

“The rand has been somewhat range bound today, trading between the low 7.54s and the current levels,” said William Van Rijn, a forex trader at Nedbank, calling Tuesday’s session rather lacklustre.

“Locally the focus will be on the outcome of the monetary policy committee on Thursday , and perhaps more specifically on the comments from the governor.”

All 24 economists polled by Reuters last week expected the Reserve Bank’s MPC to keep the key repo rate unchanged at 5.5% - its stance over the last 16 months - but the market will be looking for a signal from governor Gill Marcus’ speech of when monetary tightening could resume.

Government bonds fell earlier this month after comments from Marcus suggested a tougher stance on inflation and some market players are seeing higher interest rates by year-end, despite data showing the consumer price index slowed unexpectedly in February.

Bonds were sold on Tuesday, pushing prices lower and nudging the yield on the benchmark three-year bond 4 basis points higher to 6.79%. The yield for the 14-year paper added 5.5 basis points to 8.43%.

A weekly debt auction for R2.1bn worth of paper saw lower bid-to-cover ratios for longer dated paper, suggesting players would rather stay on the sidelines until Thursday’s rate decision.

Traders said the rand still has potential for short-term gains, with the US Federal Reserve suggested a continued accommodative monetary stance as the world’s biggest economy remains fragile, which should boost carry trade investment into high yield currencies.

“We remain constructive on the local currency and as long as we can stay below the 7.6300-6400 level against the dollar, we could see a move to the low 7.40s short term (one to three days),” Absa Capital trader Duncan Howes said.



Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Add your comment
Comment 0 characters remaining

Company Snapshot

Brought to you by BizNews

More from BizNews

We're talking about:


Johannesburg has been selected to host the Global Entrepreneurship Congress in 2017. "[The congress] will ensure that small business development remains firmly on the national agenda and the radar screen of all stakeholders, the Small Business Development minister said.

10 most expensive cars In the world

This is car porn at its best!


Luxury living

Seven of the most expensive children's toys ever made
5 millionaires turned murderers
The youngest billionaires in the world and how they made it
Watch: Flying first class has never been this luxurious!

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

How do you see your boss? He/sheis:

Previous results · Suggest a vote