JOHANNESBURG (Reuters) – South Africa‘s rand was on track for a second day of gains against the dollar on Friday, eyeing 8.85 as investors that had sold the currency due to a gloomy economic outlook readjust their positions.
Government bonds took their cue from the stronger currency, with the yield on the heavily-traded benchmark 2026 bond shedding 5 basis points to 7.295 percent.
The yield for the short-dated paper due in 2015 was down 3.5 basis points at 5.325 percent.
The rand traded up 0.85 percent at 8.8756 to the dollar by 1552 41 GMT, after ending Thursday’s session in New York at 8.9545. This was a 3 percent rise from Monday’s four-year low of 9.16.
Friday’s gains were the second strongest, after the Polish zloty, recorded against the dollar among 20 emerging market currencies tracked by Reuters.
The rand is however still down more than 5 percent against the dollar since the start of 2013, having taken a pounding in January as labour strikes in the key mining sector took some of the shine out of South Africa’s high-yielding assets.
“The potential exists for the correction to extend back towards 8.8500 as offshore (accounts) unwind some long dollar-rand positions and bonds once again,” Tradition Analytics said in a market note.
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