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Johannesburg – The rand held near recent highs against the dollar early on Friday, looking for direction after hitting the R10.92 area currently serving as a resistance barrier for rand bulls.
Dealers said the rand was outperforming its peers after a well-received interim budget from the finance minister earlier this week. However, the strong gains could overstretch the currency and result in a bounce back to weaker levels.
READ: All the budget news, views and analysis
"The dollar is temporarily struggling against the euro and Australian dollar, which could see USD/ZAR dip towards R10.86 first before the bottom we have been looking for materialises," said Judy Padayachee, technical strategist for Barclays Africa, adding she was looking for the R11.39 to R11.50 area in the next two months.
The rand was slightly firmer at R10.9625 to the dollar at 08:25, off a R10.9755 close, its first close firmer than the psychologically key 11 level since September.
It will need to break through the R10.92 area to try for stronger levels at R10.90.
Yields on government bonds tracked the sideways move in the currency, ticking up 1.5 basis points to 7.93% on the 2026 bond to trade within the week's range. The bond is coming off a year high hit on Thursday.
The Treasury will sell up to R800m ($73.00m) in 2022, 2038= and 2025 CPI-linked bonds in the session. Dealers expect the positive momentum in bonds this week will result in a decent auction result. Results are due after auction closes at 11:00.
