Johannesburg The rand was repelled from new six-year peaks versus the dollar yesterday as importers snatched the opportunity to buy greenbacks for a bargain.
Domestic bond yields crept off fresh lows reached despite the dominant view that the Reserve Bank will not cut interest rates next week, with most looking to the banks next policy meeting in February for a move on rates.
The rand firmed to an intraday high of R5.7075 per dollar, bringing its gains against the US unit to about 17 percent this year.
That was its best level since January 1999 and the latest in a string of six-year highs.
It then got hammered back and at 5pm was bid at R5.8097, marking a 2.47c decline from its level at 5pm on Wednesday.
«We have seen a lot of importer demand … that is what knocked the rand back,» said one dealer at a major local bank.
The dollar struggled up from a record low against the euro and a five-year low versus the yen as the market deliberated on how far Japan and Europe would let their currencies rise before taking action.
The dealer expected the rand to tuck back into its recent R5.75 to R5.85 a dollar range today, with few players willing to take big positions ahead of the weekend and with an interest rate decision looming next week.
Analysts mostly saw rates staying on hold next week, a poll showed yesterday, with 16 out of 19 economists predicting the Reserve Bank would hold its repo rate steady at 7.5 percent. Only three saw a cut.
In the eyes of the majority, surging consumer demand and brisk economic growth were expected to outweigh the rands strength in the Reserve Banks calculations, at least for now.
That has not halted a rally in the bond market.
«The bond rally is basically being driven by perpetual rand strength and though there are serious doubts about a rate cut next week, the market remains more confident that rates will come down in February, especially if oil prices continue to recede,» said Michael Keenan at ETM.
Barclays analyst Leon Myburgh said: «There is potential for more gains in bonds … underlying sentiment is very strong.»
The yield on the benchmark R153 was bid 1 basis point stronger at 8.17 percent after earlier hitting a new record of 8.12 percent. The yield on the R194 was bid 2 basis points softer at 7.805 percent after hitting its own record of 7.72 percent.
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