Rand steady, bonds halt post-budget slide

Johannesburg - The rand steadied against the dollar on Friday, with potential gains seen in the session against a broadly weaker greenback.

Government bonds also held firm after two days of sharp losses prompted by market scepticism about the government’s ability to meet narrower-than-expected deficit targets laid out in this week’s budget.

Fears of inflation as international crude prices climb above $124 a barrel are also expected to keep bonds under pressure.

The rand was trading at R7.6550 to the dollar at 06:50 GMT, not far from Thursday’s New York close of R7.66.

“Sentiment appears to have turned in favour of risk again and, after lacking direction for most of the week, the euro rallied strongly yesterday, taking the rand along with it,” Standard Bank said in a note.

“The rand is still firmer this morning and within sight of the R7.64 support level. With Asian markets in the black and commodity prices firming, the global backdrop is supportive of further rand strength.”

The rand has tried several times in the past two weeks to break R7.64, a breach of which would open up this year’s high of R7.52.

“With further dollar weakness we can break R7.64. Generally the dollar is weak across the board so the rand should be capped around R7.70/71 and you will probably find some bids in the low R7.60s,” said one dealer at Investec.

“Local bonds are selling off on this high inflation fear because of oil. Oil is a concern to a lot of people.”

Yields on government bonds were largely steady, with the 2015 yield unchanged from the previous close at 6.675% while that on the 2026 note was down 0.5 basis points to 8.30%.

The JSE’s blue chip Top 40 - (Tradeable) [JSE:J200] equities index opened up 0.35%.