Advertisement
South Africa's Rand Gives Up Fed Gains On Returning Uncertainty
South African bank notes featuring an image of former South African President Nelson Mandela are displayed at an office in Johannesburg January 17, 2013. PHOTO BY REUTERS/Siphiwe Sibeko.
20/09/2013
JOHANNESBURG (Reuters) - The rand was steady against the dollar early on Friday, having pared most of the strong gains it and other emerging market currencies made in the aftermath of the U.S. Federal Reserve's decision to maintain monetary stimulus.
At 0647 GMT, the rand was at 9.7010/dollar, slightly weaker but not far off its close in New York on Thursday.
The unit is coming off near four month-highs hit in the wake of the Fed's surprise decision to stick to its monthly bond purchases, a programme that has seen the extra cash flow to higher yielding emerging markets such as South Africa.
However, Reserve Bank Governor Gill Marcus on Thursday cautioned that volatility linked to uncertainty around the Fed's eventual tapering would keep emerging market currencies such as the rand under pressure.
"The rand pullback reflects the global pattern: the market thinking is that the reaction to the Fed decision was overdone. After all, tapering has just been postponed," said Rand Merchant Bank strategist John Cairns, affirming Marcus' view that the reprieve will be temporary.
Market players said the rand was likely to wander into the weekend without much impetus as investors wait for the next bit of U.S. data that may give clues about the Fed's next move.
"There is uncertainty once again but the consensus seems to be swaying towards a tapering announcement at the December Fed meeting," Cairns said.
Yields on government benchmark bonds were also steady, at 7.935 percent on the 2026 issue and 5.94 percent on the 2015 note
The Treasury is looking to sell 800 million rand in 2025, 2028 and 2046 inflation-linked bonds in the session.
Results are due at 0900 GMT and dealers expect a successful auction based on the bid tone in the secondary market this week.
Add new comment