JOHANNESBURG (Reuters) – South Africa’s rand held near recent highs against the dollar early on Friday, looking for direction after hitting the 10.92 area currently serving as a resistance barrier for rand bulls.
Dealers said the rand was outperforming its peers after a well-received interim budget from the finance minister earlier this week, however the strong gains could overstretch the currency and result in a bounce back to weaker levels.
“The dollar is temporarily struggling against the euro and Australian dollar, which could see dollar/rand dip towards 10.86 first before the bottom we have been looking for materialises,” said Judy Padayachee, technical strategist for Barclays Africa, adding she was looking for the 11.39-11.50 area in the next two months.
The rand was slightly firmer at 10.9625 to the dollar at 0625 GMT, off a 10.9755 close, its first close firmer than the psychologically key 11 level since September.
It will need to break through the 10.92 area to try for stronger levels at 10.90.
Yields on government bonds tracked the sideways move in the currency, ticking up 1.5 basis points to 7.93 percent on the 2026 bond to trade within the week’s range. The bond is coming off a year high hit on Thursday.
South Africa’s Treasury will sell up to 800 million rand ($73.00 million) in 2022, 2038= and 2025 CPI-linked bonds in the session. Dealers expect the positive momentum in bonds this week will result in a decent auction result. Results are due after auction closes at 0900 GMT.
(1 US dollar = 10.9591 South African rand)
