Risk appetite keeps rand on a high
JOHANNESBURG – The rand gained against the dollar in early trade on Tuesday, lifted by improved sentiment towards riskier assets despite continuing debt problems in the eurozone.
However, traders say the central bank will attempt to keep a lid on the rand’s gains.
The stock market opened higher as concerns over Korean tensions eased. The blue-chip Top 40 March futures contract ALSlc1 was up 0.41 per cent before the start of trade.
In early trade the rand was 0.37per cent firmer against the dollar at R6.81/$, after closing at R6.83/$ on Monday. It traded at four-year highs against the euro at R8.89/€ on Monday.
Market watchers say the South African Reserve Bank has been more active in December, trying to stem the currency’s gains. Its market activities have had slightly more impact now that trading has thinned towards the year-end.
“Exporters are prevalent and flooding the market with their dollars. The Reserve Bank has been a little more active now in December. Had they not been active in the market, the rand would have been a lot stronger,” a Johannesburg-based dealer said.
Analysts have said the central bank’s dollar-buying is justified by the rand’s resilience and its consistently strong performance, even when compared to other emerging market currencies.
Government bonds were also firmer, with the yield on the 2015 R157 issue giving up three basis points to 7.42 per cent, while the 2026 note R186 fell two basis points to 8.43 per cent.– Nampa-Reuters