Johannesburg - The rand and government bonds were slightly
firmer on Wednesday with bond inflows supporting the rand, which looked to
finally break through a resistance barrier.
The rand was at R7.7826 at 06:50 GMT, not far off its close
in New York but showing a firmer bias for the day.
Analysts say if the rand keeps pushing stronger, it could
eventually manage to convincingly break R7.78 resistance and test R7.72 levels.
“We've come to test the R7.78 level again. It hasn’t gone
through quite yet but I think there’s a good chance that it does go through,”
said a Johannesburg-based trader.
“Last week’s report by Citibank is quite big support for the
rand and that’s what has taken it through from the R7.90 levels through to the
R7.80s,” he said, adding if the rand fails at R7.78, it may bounce hard to
Citigroup announced last week local government bonds could
be included in their prominent World Government Bond Index in October, which
has since attracted huge offshore inflows.
Central bank deputy governor Lesetja Kganyago said on a
local radio station that growth in South Africa’s unsecured lending “does not
pose a systematic risk to the banks” as it constitutes less than 1% of their
assets, seeking to calm concerns about the rising trend.
A central bank report on financial stability is due at 08:00
Analysts will also keep an eye on the European Central Bank
authorities speaking during the day and then the United States Federal Reserve
interest rate policy statement in the evening.
Yields on government bonds were steady at 6.48% on the 2015
and 8.15% on the 2026 issues.
Power utility Eskom is looking to sell R250m in an
inflation-linked bond due in 16 years while the government will announce
auction plans for next week’s weekly sale on Tuesday.
Due to a national holiday on Friday, the government’s next
inflation-linked bond auction will be on May 4.