S.African govt bonds, rand open firmer after Yellen's dovish comments - CNBC Africa

S.African govt bonds, rand open firmer after Yellen's dovish comments

Southern Africa

by Reuters 0

S.African govt bonds, rand open firmer after Yellen's dovish comments. PHOTO: Wikipedia

South African government bonds and the rand opened firmer on Wednesday, buoyed by a softer U.S. dollar after Federal Reserve chair Janet Yellen said the U.S. central bank should be cautious in raising interest rates.

At 0703 GMT, the yield for the benchmark government bond due in 2026 was down 14.5 basis points to 9.2 percent.

The rand traded at 15.0800 per dollar, 0.53 percent firmer from Tuesday's New York close of 15.1600.

"Yellen’s dovish comments have reversed the dollar gains, allowing USD/ZAR to drop back to the 15.20 mark, but provide little multi-day direction," Rand Merchant Bank currency analyst John Cairns said in a note.

"The dollar remains the major risk for the rand, notably with the U.S. payrolls data due on Friday, but local politics comes to the fore in the next two days."

South Africa's Constitutional Court is expected to rule on Thursday on whether President Jacob Zuma should pay back some of the 240 million rand ($16 million) spent by the state on renovating his private home.

The Nkandla scandal is one of many controversies swirling round Zuma, who in December fired respected finance minister Nhlanhla Nene and replaced him with an unknown backbencher, triggering a dramatic sell-off in the rand ZAR=D3.

On the stock market, the Top-40 index was up 0.7 percent at the start of trade, and the broader all-share rose by the same margin.

 

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