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JOHANNESBURG — South Africa’s rand bucked the emerging markets trend yesterday in the wake of deadly attacks in Paris but remained vulnerable to broad-based dollar strength as investors sought the safety of the greenback.
Stocks opened down 0.4 percent, following falls on equity markets in Asia after Friday’s suicide attacks in Paris added to US dollar strength.
However, government bonds were stronger, with the yield on the benchmark paper due in 2026 shedding 3.5 basis points to 8.600 percent.
At 0654 GMT the rand edged 0.2 percent firmer at 14.3760, reversing a drop to a record low of 14.4290 in the previous session triggered by poor liquidity.
Traders, however, expect the unit’s recovery to be short-lived with dollar strength set to resume as risk aversion is on the rise.
“The rand could fall to another record low today if global risk aversion spikes due to Friday’s terrorist attacks in Paris,” Barclays Africa currency strategist Mike Keenan said.
“We expect rand investors to continue monitoring broad-based US dollar movements.”
Attention this week is focused on today’s US CPI data and tomorrow’s US Federal Reserve October minutes. Locally investors will be looking to see whether the Reserve Bank will be hiking interest rates or waiting on the Fed before moving. — Reuters
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