Rand recoups losses against dollar

Johannesburg - The rand recovered some of its poise against the dollar on Friday and government bonds edged higher as the market came to terms with what analysts saw as a neutral to slightly dovish Reserve Bank policy statement the previous day.

The rand was up 0.2% at R7.6995 against the dollar by 06:33 GMT, pulling back from Thursday’s six-week lows.

It barely moved on Reserve Bank data earlier on Friday that showed growth in credit demand by South Africa’s private sector quickened to 7.92% year-on-year in February.

“The currency... pulled back this morning in line with a strengthening in the euro ahead of a European finance ministers’ meeting today,” Standard Bank strategist Nomvuyo Guma said.

“Market optimism seems high that this two-day meeting will result in a bolstering of the EU’s rescue fund.”

The rand tends to track movements in the euro because of South Africa’s strong trading ties with the eurozone.

Government bonds edged higher in early trade, and the yield on the three-year paper was inversely down 2.5 basis points at 6.77 %. The yield for the 14-year paper dipped 1.5 basis points to 8.455%.

With Thursday’s widely expected Reserve Bank decision to leave the key repo rate at 5.5% now out of the way, the local market will now turn to global events for direction.

“The MPC (monetary policy committee) statement did not offer very much to the forex market to trade on with investors turning their attention firmly abroad,” said Tradition Analytics in a note.

“Whatever happens out of a combination of the eurozone and the US today will in the main govern what is likely to unfold heading into the weekend.”