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Johannesburg - The rand firmed for the second day against
the dollar on Tuesday, bouncing from major support around R8.50 to the dollar,
which was sold in renewed anticipation that the US Federal Reserve and ECB
would inject more money into the global economy.
The rand was at R8.3650 by 06:40 GMT, 0.26% stronger than
its close in New York on Monday.
The unit neared R8.50 on Thursday and Friday but failed to
break through the barrier, instead bouncing all the way to R8.3475 on Tuesday
morning.
The recovery is based on renewed expectations of coordinated
stimulus by global authorities, such as a third round of quantitative easing
from the US Federal Reserve. Such expectations are putting pressure on the
dollar, dealers said.
Speculation was also rife that the European Central Bank
(ECB) will announce details of a bond-buying programme after its policy-setting
meeting on Thursday.
“We believe that the bias remains in a favour of extended
rand strength over the coming days provided that the central banks do indeed
provide the liquidity that the market is looking for,” Absa Capital said in a
note.
The rand has managed to test R8.35 resistance but has so far
failed to make a convincing break of that level.
“We are watching the R8.35 and R8.50 levels for direction. A
close below R8.33 would signal that the consolidation patterns have further to
go and as such, another downward leg could unfold to R8.20-R8.30 in the near
term,” Absa technical strategist Judy Padayachee said.
Government bonds were also supported by the prospect of more
cash flowing into emerging markets through the global central banks' monetary
easing programmes.
Yields dropped to over one-month lows to 5.395% on the 2015
note and 7.325% on the longer 14-year paper.
Treasury is selling R2.1bn spread between its 2023, 2018 and
2048 paper in the session. Results are due after the auction closes at 09:00
GMT.
At 09:00 GMT the vehicle association will release new car sales data for August, one of few economic indicators that have continually surprised higher this year. Sales were up 18.3% in July and are expected to continue the positive trend.
