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Johannesburg - The rand strengthened slightly against the dollar on Wednesday, but dealers expected the currency to come under some pressure given the turmoil in North Africa and the Middle East.
Government bonds also firmed slightly. The yield on the 2015 issue R157 slipped 0.5 basis points to 7.785% and that on the 2026 note R186 was down 1.5 basis point to 8.97%.
The 2026 yield jumped to an 8-month high in the previous session on continued selling after the National Treasury last week announced a wider-than-expected fiscal deficit for 2011/12.
The spread between the two bonds briefly hit a high of 120.5 basis points earlier. The previous highest differential was 117 basis points, in July last year.
Bond dealers expect the government to issue more longer-term debt locally to plug the budget gap.
The rand was trading at R6.99 against the dollar at 06:52 GMT, 0.16% stronger than Tuesday's New York close of R7.0010. It briefly touched a 6-week high of R6.9275 in the previous session but gave up most of those gains overnight.
"I think R6.95 and R7.03 is the range we're looking at. Dollar/rand has strong support at R6.93 which it has tried for two days now," said a dealer.
"But I think it will struggle to break lower from here, there's good buyers around the R7.00 area," he added.
Tradition Analytics said in a note the ongoing crisis in the Middle East and North Africa - which has pushed up oil prices - had left investor on edge, raising the risk of risky assets coming under pressure.
Government bonds also firmed slightly. The yield on the 2015 issue R157 slipped 0.5 basis points to 7.785% and that on the 2026 note R186 was down 1.5 basis point to 8.97%.
The 2026 yield jumped to an 8-month high in the previous session on continued selling after the National Treasury last week announced a wider-than-expected fiscal deficit for 2011/12.
The spread between the two bonds briefly hit a high of 120.5 basis points earlier. The previous highest differential was 117 basis points, in July last year.
Bond dealers expect the government to issue more longer-term debt locally to plug the budget gap.
The rand was trading at R6.99 against the dollar at 06:52 GMT, 0.16% stronger than Tuesday's New York close of R7.0010. It briefly touched a 6-week high of R6.9275 in the previous session but gave up most of those gains overnight.
"I think R6.95 and R7.03 is the range we're looking at. Dollar/rand has strong support at R6.93 which it has tried for two days now," said a dealer.
"But I think it will struggle to break lower from here, there's good buyers around the R7.00 area," he added.
Tradition Analytics said in a note the ongoing crisis in the Middle East and North Africa - which has pushed up oil prices - had left investor on edge, raising the risk of risky assets coming under pressure.
