Bonds slump slightly in line with weaker rand

South African bonds were a little weaker on Friday morning, following the rand that pulled away from its two-and-half year best to the dollar.

Earlier on Friday, it was trading at R12.0654 Unlike the rand, local bonds showed little reaction to the Reserve Bank’s decision to leave interest rates unchanged. Rand Merchant Bank analyst Gordon Kerr said in a note that most investors were not surprised by the outcome.

“It seems as though, for now, the [Bank] is waiting for the green light from both the February budget and Moody’s review before acting,” Kerr said.

But ETM Analytics analyst Halen Bothma said the window could be closing for the monetary policy committee (MPC) to cut rates, once the major central banks embark on rate-hiking cycle.

At 10.11am, the R186 was bid at 8.49% from 8.485% and the R207 was at 7.155%, from 7.14 The rand was at R12.1533 to the dollar from R12.1312. It was at R12.2713 shortly before Reserve Bank governor Lesetja Kganyago’s speech began on Thursday. – Business Day/BusinessLive