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Johannesburg - The rand steadied near a six-week high against the dollar on Thursday with dealers expecting the currency to hold its gains in the session. Government bonds weakened though, giving up gains in previous sessions that were prompted by a strong rand.
The 2015/2026 yield spread held close to record highs at 120 basis points. The 2015 R157 yield was up 2.5 basis points to 7.725% and that on the 2026 issue R186 increased five basis points to 8.925%.
The Treasury issued a 30 year $750m global bond this week and expectations the government will issue more long-term debt domestically to plug a wider than expected fiscal deficit have led to sharp losses since last week.
Tradition Analytics said in a note the strong rand is likely to entice some traders into the market, so losses may be limited.
The rand broke through resistance at R6.95 on Wednesday, gaining momentum to hit a six-week high of R6.8560. It was trading at R6.8585 at 06:43 GMT against a New York close of R6.8775.
"I think we are near the bottom of the range here. There's some (dollar/rand) support at R6.83 and that's going to be the base for today unless the dollar selloff continues," said Ian Martin, a trader at Rand Merchant Bank.
"We are going to struggle to get above R6.95 and the rand is going to hold its gains."
The 2015/2026 yield spread held close to record highs at 120 basis points. The 2015 R157 yield was up 2.5 basis points to 7.725% and that on the 2026 issue R186 increased five basis points to 8.925%.
The Treasury issued a 30 year $750m global bond this week and expectations the government will issue more long-term debt domestically to plug a wider than expected fiscal deficit have led to sharp losses since last week.
Tradition Analytics said in a note the strong rand is likely to entice some traders into the market, so losses may be limited.
The rand broke through resistance at R6.95 on Wednesday, gaining momentum to hit a six-week high of R6.8560. It was trading at R6.8585 at 06:43 GMT against a New York close of R6.8775.
"I think we are near the bottom of the range here. There's some (dollar/rand) support at R6.83 and that's going to be the base for today unless the dollar selloff continues," said Ian Martin, a trader at Rand Merchant Bank.
"We are going to struggle to get above R6.95 and the rand is going to hold its gains."
