South African rand flat as investors mull US Treasury move

Johannesburg - The South African rand remained relatively stable in early trading on Thursday, according to market reports. The currency, which traded at 16.09 against the US dollar, did not deviate from its previous closing rate. Umkhulu Treasury’s Adam Phillips anticipates the South African currency to remain within a narrow range throughout the week. "Should it close below 16.1470 on Friday, it could potentially strengthen," Phillips stated.

Similar to other currencies that are sensitive to global events, the rand's value often fluctuates based on international developments when there is a lack of local economic data to consider. The US dollar experienced a decline against a basket of currencies following the US Treasury Department's announcement to double buyback operations for longer-dated government bonds, with the aim of bolstering liquidity in the market.

This decision unfolded after a significant bond selloff, as investors sought higher returns amid rising inflationary concerns triggered by the US-Israeli conflict in Iran.

ETM Analytics noted that the Treasury's move had bolstered global risk appetite, leading to increased demand for higher-yielding assets, including South African government bonds. The benchmark 2035 government bond in South Africa maintained its stability in early trade, with the yield decreasing by half a basis point to 8.465%.