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Johannesburg - The rand firmed against the dollar on Monday after local South African bonds were formally included in Citi’s prestigious World Government Bond Index(WGBI), exposing them to a much wider pool of international investors.
The rand was 0.36% firmer at R8.2775 against the greenback at 06:10 GMT from Friday’s New York close of R8.315.
Twelve South African government bonds with a market value of $93.82bn acceded to the index, representing 0.45% of its value, Citigroup said last week.
It is hard to pinpoint how much money fund managers have injected into local debt ahead of the inclusion but analysts reckon WGBI-related demand has accounted for much of the nearly R71bn of bonds purchased by foreign accounts so far this year.
“Maybe we can expect a rush of bond inflows today but there was practically nothing on Friday,” Rand Merchant Bank said in a note.
Traders said that the rand was likely to continue to trade in an R8.17-R8.34 range, although they did not rule out the possibility of the local currency due to weakness in the euro.
The single currency hit a three-week low on Monday after an audit of Spain’s banks failed to quell concerns about the country’s progress towards a bailout needed to shore up its public finances.
Locally, investors will watch the Kagiso September Purchasing Managers’ Index at 09:00 GMT.
The yield on the three-year bond was up two basis points to 5.40% and that on the 14-year paper rose 2.5 basis points to 7.455%.
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The rand was 0.36% firmer at R8.2775 against the greenback at 06:10 GMT from Friday’s New York close of R8.315.
Twelve South African government bonds with a market value of $93.82bn acceded to the index, representing 0.45% of its value, Citigroup said last week.
It is hard to pinpoint how much money fund managers have injected into local debt ahead of the inclusion but analysts reckon WGBI-related demand has accounted for much of the nearly R71bn of bonds purchased by foreign accounts so far this year.
“Maybe we can expect a rush of bond inflows today but there was practically nothing on Friday,” Rand Merchant Bank said in a note.
Traders said that the rand was likely to continue to trade in an R8.17-R8.34 range, although they did not rule out the possibility of the local currency due to weakness in the euro.
The single currency hit a three-week low on Monday after an audit of Spain’s banks failed to quell concerns about the country’s progress towards a bailout needed to shore up its public finances.
Locally, investors will watch the Kagiso September Purchasing Managers’ Index at 09:00 GMT.
The yield on the three-year bond was up two basis points to 5.40% and that on the 14-year paper rose 2.5 basis points to 7.455%.
*Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.
