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Rand finds support as miners return

Feb 20 2013 08:54


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Last traded 345
Change 7
% Change 2
Cumulative volume 581142
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg - The rand held steady against the dollar early on Wednesday, and may find more support in the session as protesting miners return to work and calm investor fears about a flare up of violence in South African mines.

Anglo Platinum [JSE:AMS] said workers at its Siphumelele mine were clocking in for their shifts after a walk-out on Tuesday in solidarity with colleagues hurt in a union rivalry clash the previous day.

The flare-up saw investors dump the rand, worrying it might signal a return of the mining clashes that saw at least 50 people killed in the platinum belt last year.

By 06:19 GMT on Wednesday, the rand had recovered losses to trade at R8.85 against the dollar, slightly firmer than its New York close on Tuesday.

Dealers also said foreign buying of high yielding and relatively cheap local assets was propping up the local currency.

"We saw quite a lot of foreigners buying the bond market yesterday. That's seen the rand strengthen to R8.85 levels. There are a couple of foreign banks which feel that the rand is undervalued with regards to other emerging markets," said Brigid Taylor of Nedbank.

Inflation data should also support local assets, if it comes within market expectations. The data is for January and economists polled by Reuters expect prices did not increase from December, remaining at 5.7% year-on-year.

If the number overshoots that expectation, bond yields are likely to take a hit and investors may become more aggressive at the weekly inflation-linked bond sales, where they can hedge against the rise in CPI.

The release will for the first time use data from a 2010-2011 household spending survey. A high January number could be the effect of the new base data on CPI, and a precursor for the rest of the year. The data is due at 08:00 GMT.

Bond yields were down 2 basis points at 5.305% on the 2015 note and 3.5 basis points at 7.24% on the 2026 issue.


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bonds  |  rand  |  markets



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