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Johannesburg - The South African rand traded slightly firmer against the dollar on Tuesday, drawing strength from hopes of a successful conclusion to debt swap negotiations in Greece which boosted risk appetite in emerging markets.
Government bonds were little changed on the JSE exchange following signs of increased demand from foreigners seeking higher yields as interest rates in developed countries remain depressed.
The rand showed little reaction to data showing a trade surplus of R4.7bn in December compared with an R8bn deficit in November, as analysts said the swing bodes well for the currency.
"The data is positive from a GDP differential perspective as it implies lower imports and relatively robust exports," Standard Bank strategist Nomvuyo Guma said.
By 15:30 GMT the rand was at 7.7956 against the greenback, off a session high of 7.7557 and up 0.46 percent from Monday's New York close of 7.8320.
"The rand continues to oscillate within a broader range, very much in line with broader risk sentiment. Today we continue to track the positive tone in the external emerging market and risk environment, probably driven by the euro going above the 1.32 level," Absa Capital trader Duncan Howes said.
"We're staying more constructive on the (rand) within the range. We think risk will continue to be driven by events and news out of Europe and also end of the week we look at U.S. non-farm payrolls (for direction)."
Benchmark government bonds were flat.
The yield on the three-year bond dipped one basis point from Monday's close to 6.46 percent while that for the longer-dated 2026 issue inched up half a basis point to 8.19 percent.
Foreigners have taken up South Africa's better yielding debt so far this year as rates in Europe and the United States remain subdued, with net inflows into the secondary bond market amounting to 4.1 billion rand last week.
Demand was also high at Tuesday's weekly bond auction for primary dealers, with the Treasury selling R2.1bn of the 2018, 2020 and 2031 issues at bid-to-cover ratios of 3.87, 3.93 and 1.89 respectively.
