Rand still basks in election afterglow

2014-05-09 09:35

Johannesburg - The rand hovered near the previous day's four-month highs against the dollar on Friday as risky assets remained in demand and markets applauded a largely trouble-free national election.

A Reserve Bank report showed the country's gross reserves ticked higher to $49.555bn at the end of April from $49.454bn in March, mainly due to the stronger rand during the month.

At 06:40 GMT, the rand traded at R10.3400 against the greenback, little-changed from its previous close at R10.3355. It was within easy reach of Thursday's near 5-month high of R10.3125.

"All emerging market high-return currencies are in vogue and rallying hard. It is true, though, that the rand did particularly well yesterday. The election is the obvious explanation," Rand Merchant Bank analyst John Cairns said in a market note.

The ruling ANC is on track for a strong victory in the poll, fending off a challenge by Julius Malema's radical Economic Freedom Fighters whose leftist policies had worried investors.

The rand has reversed sharp losses against the dollar earlier in the year, and is now up 1.4% since January 1.

Government bonds extended Thursday's gains and the yield for the 2026 benchmark dipped 2 basis points to 8.115%, its lowest since November last year, according to Thomson Reuters data.

The shorter-dated 2015 issue was yielding 6.51%t, also down 2 basis points from its last close.

Bond bulls were likely to remain supported by comments from US. Federal Reserve chair Janet Yellen that interest rates in the world's largest economy were unlikely to start rising until there was a strong recovery, Barclays Africa said in a note.

  • Gazza King - 2014-05-09 11:17

    Yeah, but for how long?

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