Johannesburg - The rand was steady against the dollar on
Wednesday as demand for the local currency ahead of the country’s debut in a
key government bond index next week offset renewed risk aversion over Europe’s
debt problems.
The rand traded at R8.2378 to the greenback by 06:42 GMT,
barely changed from Tuesday’s close at R8.2350.
Demand for local assets has been boosted in recent weeks by
South Africa’s inclusion on October 1 in the World Government Bond Index
(WGBI), tracked by many fund managers.
This should keep the rand supported above R8.29 against the
dollar despite renewed worries about contagion from eurozone liquidity problems
and wage related domestic strikes that have hit the mining sector, said RMB
chief dealer Jim Bryson.
“If the rand gets above R8.25 we will go to R8.29 but we
would still expect to see foreign interest there, buying rands ahead of WGBI,”
Bryson said.
“This whole WGBI thing is keeping the local industrial
strike situation off the radar at the moment although it can’t be good for
sentiment going forward,” he added.
Government bonds were steady to firmer in early trade, with
the yield on the three-year benchmark flat at 5.31% while that for the 14-year
paper dipped half a basis point to 7.3%.
Non-resident accounts have bought nearly R75bn worth of bonds since the start of the year, and the Reserve Bank said last week this should persist for some time as portfolios adjust to the WGBI inclusion.
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