Johannesburg - The rand was flat against the dollar on
Monday, off the 28-month lows plumbed last month as investors sought safety
outside emerging markets, but it still looked vulnerable to the eurozone debt
crisis which has kept risk appetite depressed.
Government bonds were slightly firmer, but should struggle
to gain momentum as foreigners continue to bypass local debt despite the higher
yields on offer compared with "safe haven" currencies such as the yen and Swiss
franc.
By 06:57 GMT the yield on the four-year bond was at 6.99%,
its closing level on Friday, while that for the bond due in 2026 dipped half a
basis point to 8.615%.
Johannesburg Stock exchange data showed foreign investors dumped
about R18bn of South African bonds in September - after buying R11bn in August
- in a sell-off that also hit other emerging markets.
"So long as the eurozone debt crisis remains unresolved ...
and investors are struggling to price risk amid high levels of political as
well as economic uncertainty ... it will be difficult for the risk-on trade to
come back to the fore," Tradition Analytics said in a note.
The rand was down 0.14% at R8.1115 to the dollar compared to
8.10 when the New York market closed on Friday.
"The rand hasn't done a lot. We opened in Johannesburg at
R8.16, obviously off the lows we saw last week. But euro has come off and the
dollar is on the front foot at the moment," Standard Bank trader Jan Defouw
said, adding this should keep the rand under pressure.
Purchasing Managers' Index numbers due out at 09:00 GMT are likely to show the manufacturing sector, which accounts for about 1% of GDP, remains under stress, keeping the door open for lower interest rates next year, which would normally be supportive of bonds.
But analysts said domestic data would continue to take a back seat to the global trends that are shaping markets.