South Africa’s rand regained some ground against the dollar Monday and should tread a fairly steady path in the run-up to a national budget statement seen offering few surprises.
At 6.48am the rand ZAR=D3 was at 7,2385 to the greenback 0,5 percent firmer compared with Friday’s close.
Traders said Friday’s announcement that Egyptian President Hosni Mubarak had finally bowed to public pressure to step down had boosted investors’ appetite for emerging markets which had wilted during political protests in the North African country.
“I reckon the rand will be fairly stable today. With Mubarak stepping down there could be some stability setting in but we have to take cognisance that there’s still some nervousness with regards to Egypt,” said Craig Zaayman, managing director at Purple Capital Treasury.
On the domestic front, inflation and retail sales data due on Wednesday should give clues on the outlook for interest rates this year while the market would also look to next week’s budget for exchange rate pronouncements.
“The stability of the fiscal and monetary environment in South Africa has been priced in the market, so I don’t think you can expect much movement,” Zaayman said. “The movement will come should there be something silly in the budget but I don’t expect any surprises there.”
Government bonds were firmer yesterday and yields inversely headed lower. The yield on the 2015 government bond ZAR157= was down 5 basis points at 7,79 percent while that of the 2026 note ZAR186= gave up 4 basis points to 8,65 percent.
The JSE’s blue-chip March stock futures contract ALSIc1 was up 0,74% ahead of the 7.00am start of trade on the local bourse, suggesting an extension of Friday’s gains. —Reuters