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Johannesburg - The rand touched near two-week highs against
the dollar on Wednesday ahead of data likely to show an uptick in inflation,
keeping alive the changes of interest rates rising by year-end.
Government bonds extended the previous day's gains as
relatively higher yields gave local debt the edge over bonds in developed
economies.
By 06:39 GMT the rand was at R6.7025 to the dollar, up 0.15%
from Tuesday's R6.7125 close. The rand briefly touched R6.70 earlier on
Wednesday, its strongest level since June 9 according to Reuters data.
"It's all about the weaker dollar at the moment, risk
seems to be back on for now," a currency dealer in Johannesburg said.
Analysts said emerging market assets were in favour for the
moment after a vote in confidence in the government in debt-ridden Greece
helped boost risk appetite.
Government bonds extended Tuesday's gains, pushing the yield
on the four year bond R157 and that for the longer-dated 2026 note three basis
points lower to 7.44% and 8.52% respectively.
"The statistics yesterday showed us that the foreign
accounts were very involved in our market and they bought about R2bn worth of stock, and that is probably still filtering in today as well,"
a bond trader said.
"The 10-year US Treasury is at 2.98% and our 10-year is around 8.36%, so obviously there's a spread to be gained there. As long as interest rates in the UK and the United States remain at these levels, South African yields will continue to be attractive."
