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Johannesburg - The rand firmed for a second day on Tuesday,
shaking off selling last week sparked by a Fitch outlook downgrade, while
higher commodity prices and exporters keen to sell dollars at the lower levels
have been supporting the currency.
The rand has gained 0.9% to the dollar to R8.0285 in early
trading. Charts show it is unlikely the rand will break through resistance at
R8.01/02.
The rand has attempted the R8.01/02 area twice this year,
and bounced weaker each time.
The US market opens on Tuesday after being closed on Monday
for a national holiday. The lack of players in the market on Monday could have
allowed the currency to post quick gains, dealers said.
“We’re quiet this morning. I think that maybe (Friday's
move) was an overreaction. A lot of the bad news was expected,” said Ashley
Dickinson, a bond trader at Renaissance Capital.
Fitch rating agency put South Africa on negative outlook on
Friday, driving a frantic sell-off in local assets.
Government bonds were steady at Monday’s close awaiting the
second fixed-income auction of the year at 09:00 GMT, after which dealers are
likely to take positions.
The yield on the 2015 bond was at 6.76% while the 2026
issue stood at 8.53%.
Treasury is selling R2.1bn in 2020 and 2041 paper.
“I think we’ll see some demand. The price action on the R207
has been reasonable in the last couple of days and that’s normally a relatively
good indication of how it’s going to go,” Dickinson said.
“I think the 207 leg can be slightly better than fair value
at the time and the 214 will probably come out at fair value.”
