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Johannesburg - The rand firmed against the dollar in early trade on Friday, pulling away from the psychologically key 11.0 level as a pause in the dollar rally provided temporary respite for South Africa's currency.
The rand firmed to R10.8750/$ at 06:20 GMT, 0.2% stronger than its close in New York on Thursday. If it holds, the rand will notch up its first positive day in a week.
South Africa's currency has tested fresh five-year lows every session this week, and R11.0/$ looked certain until a pull-back that started in the previous session.
"The topside run on the dollar/rand is now looking a little tired approaching the end of the week," Tradition Analytics wrote in a note to clients.
Dealers say the rand has been oversold and rand bears are lacking momentum, which should result in a dip before the pair tries for weaker levels close to 11 again.
"We have seen momentum on the pair stall towards and above 10.90 and although our core view remains rand bearish for now, there is certainly room for a pullback towards R10.80/$ and potentially R10.70/$ should this first support be broken," Tradition added.
The rand will look offshore for further impetus, with the local calendar bare apart from weekly government debt sales.
The Treasury will auction R800m in inflation-linked paper spread over the 2025, 2038 and 2046 maturities at 09:00 GMT, with a sale of T-Bills following at 10:00 GMT.
Concerns about higher food prices and the weak currency fuelling inflation are expected to drive demand for the paper seen as a hedge against inflation.
Yields on straight government bonds edged down half a basis point on Friday, to 8.34 percent on the 2026 benchmark issue and 6.225% on the 2015 note.
The rand firmed to R10.8750/$ at 06:20 GMT, 0.2% stronger than its close in New York on Thursday. If it holds, the rand will notch up its first positive day in a week.
South Africa's currency has tested fresh five-year lows every session this week, and R11.0/$ looked certain until a pull-back that started in the previous session.
"The topside run on the dollar/rand is now looking a little tired approaching the end of the week," Tradition Analytics wrote in a note to clients.
Dealers say the rand has been oversold and rand bears are lacking momentum, which should result in a dip before the pair tries for weaker levels close to 11 again.
"We have seen momentum on the pair stall towards and above 10.90 and although our core view remains rand bearish for now, there is certainly room for a pullback towards R10.80/$ and potentially R10.70/$ should this first support be broken," Tradition added.
The rand will look offshore for further impetus, with the local calendar bare apart from weekly government debt sales.
The Treasury will auction R800m in inflation-linked paper spread over the 2025, 2038 and 2046 maturities at 09:00 GMT, with a sale of T-Bills following at 10:00 GMT.
Concerns about higher food prices and the weak currency fuelling inflation are expected to drive demand for the paper seen as a hedge against inflation.
Yields on straight government bonds edged down half a basis point on Friday, to 8.34 percent on the 2026 benchmark issue and 6.225% on the 2015 note.
