Johannesburg - The rand rallied 0.6% against the dollar on
Friday, strengthening with other emerging market assets and shaking off
concerns about unrest in the mining sector after the US Federal Reserve
announced a third round of monetary easing.
The rand gained to R8.2040 against the dollar at 07:04 GMT,
after closing at R8.2440 in the previous session.
The currency reversed a 1% fall after the Fed said it would
buy $40bn of mortgage assets every month until the US jobs picture improved.
"After yesterday's Fed announcement the dollar is under
pressure across the board. We've had a surge in equities and commodities, so
for the day we could see further strength in the rand," a local currency
trader said.
The currency's next resistance level is around R8.15, the
rand's previous low from earlier this week.
"The initial market reaction has been positive. The real
test is whether it helps the US economy recover from its slumber, and from a
rand perspective the multi-week or month issue is whether it will keep the
dollar under pressure," Rand Merchant Bank said in a note.
Rand bears have retreated from R8.45 support in the previous
session all the way to R8.1870 early on Friday.
Analysts say the confirmation of more US monetary stimulus
shifts some attention away from South Africa's mining woes, and the rand will
be temporarily allowed to join the global markets rally.
However, if the strikes sweeping across the mining sector
intensify, the rand could be hit again.
Mining bosses at troubled platinum firm Lonmin [JSE:LON]
have offered striking miners a wage settlement way below that demanded.
A violent rejection of that offer could weigh on local
assets again, which have been under the cloud of the mining strife for the past
five weeks.
"For the day we are looking for a R8.12 - R8.40 range -
we've got to keep an eye on the mining and strikes. You've got to be cautious
and wary of local events and headlines," the trader cautioned.
Government bonds gained, with yields falling 6 basis points
to 5.43% on the three-year note and 6.61% on the 2021 issue.
Treasury will sell R800m spread over its 2025, 2038 and 2050
inflation-linked government bonds at 09:00 GMT.
Results are due after the auction closes and dealers expect
interest in the longer bonds to be strong.