S.Africa's rand slightly firmer before rates verdict
JOHANNESBURG: South Africa's rand gained slightly against the dollar on Thursday, coming off six week lows ahead of the central bank's interest rate decision later in the session.
A Reuters poll forecast the Reserve Bank will keep its key repo rate at 5.5 percent, taking the view that 650 basis points of cuts since Dec. 2008 is sufficient stimulus to help lift growth after the economy contracted in 2009.
Government bonds firmed, recouping some heavy losses that pushed yields to multi-month highs this week.
The rand fell to a six week low of 6.9978 in the previous session, inching close to the key psychological level of 7.00/dollar that could indicate further losses if breached.
By 0643 GMT, it was trading at 6.9850 to the dollar, 0.14 percent firmer than Wednesday's New York close of 6.9950.
Although a decision to hold rates steady should be supportive of the rand, technical factors point to further weakness for the currency, which is trading weaker than its 100-day moving average for a second session in a row.
"It's been weakening steadily since the beginning of January and we saw a very weak close last night and that is an indication it could weaken further," said a local dealer.
"6.93/94 is the base for today and if it gets down there it will be good buying interest," he added, seeing the rand breaching the 7.00/dollar level in the session.
Local stocks looked set to open lower in line with global markets. The JSE's blue chip Top-40 March futures contract was down 0.55 percent before the 0700 GMT start of trade.
The yield on the 2015 bond was down 6.5 basis points to 7.60 percent and that on the 2026 note fell by 5.5 basis points to 8.59 percent. !
A Reuters poll forecast the Reserve Bank will keep its key repo rate at 5.5 percent, taking the view that 650 basis points of cuts since Dec. 2008 is sufficient stimulus to help lift growth after the economy contracted in 2009.
Government bonds firmed, recouping some heavy losses that pushed yields to multi-month highs this week.
The rand fell to a six week low of 6.9978 in the previous session, inching close to the key psychological level of 7.00/dollar that could indicate further losses if breached.
By 0643 GMT, it was trading at 6.9850 to the dollar, 0.14 percent firmer than Wednesday's New York close of 6.9950.
Although a decision to hold rates steady should be supportive of the rand, technical factors point to further weakness for the currency, which is trading weaker than its 100-day moving average for a second session in a row.
"It's been weakening steadily since the beginning of January and we saw a very weak close last night and that is an indication it could weaken further," said a local dealer.
"6.93/94 is the base for today and if it gets down there it will be good buying interest," he added, seeing the rand breaching the 7.00/dollar level in the session.
Local stocks looked set to open lower in line with global markets. The JSE's blue chip Top-40 March futures contract was down 0.55 percent before the 0700 GMT start of trade.
The yield on the 2015 bond was down 6.5 basis points to 7.60 percent and that on the 2026 note fell by 5.5 basis points to 8.59 percent. !
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