Johannesburg - The rand firmed against the dollar on
Thursday after dovish comments from a US Federal Reserve official on the
possibility of further monetary easing in the world’s top economy put pressure
on the greenback.
The rand was up more than half a percent against the US
dollar at 06:14 GMT, trading at R7.9515 against the dollar from Wednesday’s New
York close of R8.005.
The European central bank also hinted at the possibility of
more bond-buying, but an upcoming Italian debt sale posed more risks to jittery
markets.
“We must bear in mind that the interest rates scenarios
globally are still pretty much in play, low interest rates probably still will
remain in places like US and Europe,” said Ion de Vleeschauwer, a trader at
Bidvest Bank.
Ultra-loose monetary policy to stimulate the economies of
the developed world has often played in favour of the rand, given the wide
interest rate differentials.
The Federal Reserve’s No 2 official, Janet Yellen, said on
Wednesday an ultra-easy monetary policy is appropriate given high unemployment
and the headwinds facing the US economy, and she left the door open to further
action if needed.
Dealers will closely watch a planned auction on Thursday in
Italy to gauge sentiment in the fixed income market.
Italian bonds have been dragged in the mud by last week’s
Spanish auction that showed investors concern over Europe ability to repay its
debts, and three-year Italian borrowing costs are set to jump by a full percentage
point from a month ago.
South African government bonds were little changed, with the
yield on the 2015 issue falling 1.5 basis points to 6.745% and that on the 2026
issue down by half a basis point to 8.49%.
On the bourse, the JSE’s blue-chip Top 40 - (Tradeable) [JSE:J200] March futures contract was up 0.12% before the 07:00 GMT start of trade, pointing to a positive start.