Johannesburg - The rand weakened against the dollar on
Tuesday as data showed foreign exchange reserves fell in April and continued
worries about eurozone debt problems kept pressure on emerging market assets
seen as carrying higher risk.
However, comments by Reserve Bank Governor Gill Marcus that
the inflation trend suggests there is little room to cut interest rates should
support the rand by attracting offshore investors in search of yield.
By 07:04 GMT the rand was trading 0.34% weaker at R7.8265
against the dollar from Monday’s close at R7.80.
"It’s a quiet start. We should see bids at the R7.80/R7.79
level. Buying dips is still the way to go after the sell-off we had yesterday,"
said Jan Defouw, a trader at Standard Bank.
The unit was at R7.8150 before a central bank report at
06:00 GMT showed South Africa’s net gold and foreign exchange reserves dipped
to $48.823bn in April while gross reserves fell to $49.942bn.
The decline was due to foreign repayments made on behalf of
the government, the Reserve Bank said. The Bank has previously said it would
take advantage of a stronger currency to boost reserves, but insists it does
not target a level for the rand.
Government bonds tracked the rand weaker, with yields for
the three-year benchmark and the longer-dated 14-year paper each adding two basis
points to 6.445% and 8.17% respectively.
A weekly government bond auction at 09:00 GMT, where the Treasury is offering R2.1bn of paper, should give pointers on market appetite for South African debt.