JOHANNESBURG – South Africa’s rand firmed in early trade on Tuesday, getting a temporary reprieve against the dollar as investors preferred to stay out of the market due to coming policy meetings at home and abroad.
The rand was at 8.4674, 0.25 percent firmer than its 8.4875 New York close on Monday. Analysts say technical signals show a temporary breather in the overall bearish trend for the currency.
“We would not be surprised to see some stalling before decisive breakouts occur,” said Judy Padayachee, technical strategist for Absa Capital.
However the rand is expected to get back on a weaker path going into next month.
“Bigger picture, we remain rand bearish into the third quarter and target 8.80-9.00 against the dollar,” Padayachee said.
For the session the rand should find support at 8.50, a key technical level.
Dealers say turnover was poor on Monday as investors wait on key events towards the end of the week, when activity should pick up as the European summit on Thursday and Friday coincides with month-end activity for some companies.
The ruling African National Congress party policy conference will start during the session, where the ruling party will draw up policy for the next five years.
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Debates at the conference will keep investors nervous about the potential of more state control in key sectors of the economy such as mining sector and the central bank.
Bond yields were up three basis points each on the benchmark government paper to 6.11 percent on the three-year note and 8.125 percent on the 14-year issue.
Government is looking to place two new issues at an auction later in the session, with 800 million rand of the 2023 bond and 500 million rand of the 2048, along with 800 million rand of the 2031 issue. The results are due at 0900 GMT and dealers expect keen interest on the new paper.
