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S.Africa’s rand seen range bound against dollar

JOHANNESBURG - South African rand firmed slightly against the dollar on Thursday and should stay within narrow ranges as the market eyes a G20 summit at which heavy capital inflows which have strengthened emerging market currencies will be in focus.

Manufacturing data due out at 1100 GMT was unlikely to trigger any significant moves in the rand, but should give further clues about the Reserve Bank’s decision on domestic interest rates at next week’s policy meeting.

Some analysts believe the central bank will cut rates further, partly to dampen investor appetite for the high-yielding rand, which has pushed the currency up 28 per cent against the dollar since the start of 2009, undermining exports in particular.

At 0644 GMT the rand traded at 6.87 to the dollar, a gain of 0.31 per cent over Wednesday’s close at 6.8915.

“Heading into today it is clear that upside dollar/rand momentum is stalling. The market was very undecided yesterday as indicated by the pair closing where it opened ... after trading down to 6.83 and up to 6.94,” said Tradition Analytics.

“We favour a range trading bias today with a downside risk,” it added, predicting a 6.83/92 range for the day.

Government bonds were mixed, with the yield on the benchmark 2015 issue dipping 2 basis points to 7.025 per cent while the yield for the 2026 bond was unchanged from Wednesday’s closing level of 8.105 percent.