Rand holds its own despite global tensions, local strike

JOHANNESBURG (Reuters) – South Africa's rand traded virtually unchanged against the dollar on Tuesday, with market watchers expecting the currency to stay in narrow ranges given a lack of significant news to steer it.

The rand has been resilient despite general global risk aversion spawned by political tensions in Ukraine and the Middle East, coupled with a domestic wage strike by metals and engineering workers now entering its fourth week.

At 0647 GMT the currency traded at 10.6125 versus the greenback, just 0.09 percent off its previous close and within easy reach of Monday's three week high of 10.5975.

Analysts said global markets were mainly focussed on U.S. consumer inflation data on Tuesday which could give pointers on when the Federal Reserve will start raising rates.

"The bigger worry for the rand remains an about-turn from the Fed on inflation risks and resultant re-pricing in the Treasury market which would negatively impact on capital flows towards emerging markets," Rand Merchant Bank analyst John Cairns said.

South African government bonds were flat ahead of a weekly debt auction for 2.35 billion rand worth of paper.

The yield for the 2026 benchmark bond was trading at 8.12 percent while that for the 2015 instrument ZAR157 was at 6.65 percent.