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Johannesburg - The rand was off last week’s four-week lows
against the dollar on Monday but remained on the back foot, with renewed
worries on China’s growth prospects likely to weigh on commodity currencies
overall.
Government bonds edged higher, extending last week’s gains
as investors, who are now seeing a lesser chance of domestic interest rate cuts
this year, buy back into local debt.
The yields on the benchmark three-year and 14-year paper
each shed a basis point to 6.82% and 8.45% respectively.
“There was a lot of short-covering last week, with about
R2.5bn bought by foreigners on Friday, so there’s definitely been good demand
after CPI (consumer price index) came out lower than expected,” a Johannesburg bond trader said.
“A lot of guys were pricing in rate hikes before that and
that’s reversed aggressively.”
By 06:47 GMT the local currency was at R7.7030 to the
greenback, a loss of 0.3% from Friday’s close.
“Resurgent concerns over China’s growth has commodity prices
and commodity currencies under pressure this morning,” Standard Bank strategist
Nomvuyo Guma said in a note.
The rand should however find support around the 7.75% level,
after failing to push beyond that both on Thursday and on Friday, when it
bounced back to close at R7.68.
“(This) could imply that the bearish momentum that characterised most of last week’s trade has run out of steam,” said Absa Capital.
