2014-02-03 16:42:25 The rand was weaker late on Monday after reported comments by Reserve Bank governor Gill Marcus that expectations by money markets of rate hikes of up to 200 basis points this year were overexaggerated. At 4.02pm‚ the rand was at R11.1719 to the dollar from its previous close of R11.1155. Against the euro‚ the rand was at R15.0720 from Friday’s close of R14.9948 and was at R18.2515 to the pound from a close of R18.2709. The euro was at $1.3495 from $1.3487 at its previous close. “The rand has been trading in a range of R11.20-R11.06 to the dollar since Friday. Comments by governor Marcus on interest rate expectations today saw the rand trading a bit softer‚” RMB currency trader Jim Bryson said. “Emerging-market contagion has abated at bit … for now. We are‚ however‚ still susceptible to US tapering issues for the next six months. We are moving sideways within a range‚ indicating a phase of consolidation at the moment. If we manage to break below R11.06 to the dollar‚ we can see R10.80/R10.90 to the dollar after that‚” he said South African bonds were stronger late on Monday‚ even though the rand had turned weaker from midday. At 4.24pm‚ the shorter-dated R157‚ redeemable in 2015‚ was bid at 7.290% and offered at 7.270% from Friday’s close of 7.395%. The middle-dated R207 bond‚ due in 2020‚ was trading at 8.460% from a previous close of 8.500%. The longer-dated benchmark R186‚ due in 2026‚ was trading at 8.870% from 8.915% at its previous close. The rand was at R11.1681 to the dollar from its previous close of R11.1155. Despite opening stronger in the morning‚ the JSE all share closed lower on Monday following topsy-turvy trade‚ with financials and banking shares sold‚ while gold shares were in demand. The all share index ended 0.39% down at 44‚956.91‚ with the blue-chip top 40 index slipping 0.38%. The banking index was 1.41% lower‚ with financials losing 0.66%. The resource and platinum indices lost 0.28% and 0.71% respectively. Industrials were mixed‚ but the index was 0.35% down. Gold shares rallied in reaction to the stronger gold price‚ with the index ending the day 0.61% higher. Portfolio manager at Vunani Private Clients Michele Santangelo said trading was choppy. “We opened nicely for the day‚ but then saw some strong selling over midday with some rand hedges recovering later as the rand weakened.” The rand softened in response to comments by Reserve Bank governor Gill Marcus that expectations of interest rates climbing up to 200 basis points this year are “over-exagerated.” The market has shown some confusion after the rate hike last Wednesday‚ notably not being able to digress how many more rate hikes the Bank has in mind. Santangelo said the rand was at R11.06/$ before the comments by Marcus. “Afterwards it fell to R11.17/$.” Local traders said bonds had benefited from buying in the market in the early morning from previously oversold positions. The conventional view is that SA’s bond market has been weakening excessively compared to other emerging markets. Foreigners were net sellers of R11.895bn of South African bonds including repurchase agreements in the week ended January 31‚ after net sales of R6.290bn of local bonds the week before. However‚ compared to other emerging-market sell-offs‚ such as in Argentina and Turkey‚ there has been no panic-selling of local bonds. According to Sanlam economist Jac Laubscher‚ “SA is less vulnerable than many other emerging-market countries to a reduction in capital flows into emerging corporate bond markets as it did not experience a surge in new issuances similar to that in many other emerging-market countries.”
Posted on: Mon, 03 Feb 2014 16:23:39 +0000
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