S.Africa rand firms vs dollar, watches global markets
Thu 25 Sep 2008
South Africa's rand firmed against an ailing dollar on Thursday and will look to global markets for direction while keeping track of local political developments after President Thabo Mbeki's resignation.
The rand weakened some 2.5 percent against the dollar on Tuesday, ahead of Wednesday's public holiday in South Africa, after news that several ministers including Finance Minister Trevor Manuel had quit in the wake of Mbeki's resignation.
The currency however recovered some ground after Manuel indicated he was willing to serve under a new president. An interim president is due to be sworn in on Thursday.
At 0636 GMT, the rand traded 0.46 percent stronger at 8.1365 to the greenback after closing in New York on Wednesday at 8.1743.
This followed the dollar's slide against the euro and the yen on lingering uncertainty over the U.S. government's proposed $700 billion bank bailout plan and worries about the impact of a credit crunch on the world's biggest economy.
Political uncertainty stemming from Mbeki's resignation, after the ruling ANC withdrew support following a judge's suggestion of official interference in a graft case against Jacob Zuma, who beat Mbeki to the ANC leadership last December, would keep the rand unsettled, Absa Capital said. "In our view, we continue to expect rand volatility and some weakness on domestic developments," it said in a note. "But that weakness is likely to be tempered by international market developments and the potential for large FDI inflows in coming weeks."
By 0638 GMT, before the market opening at 0700 GMT, South Africa's blue chip Top-40 December futures contract was down 1.46 percent, suggesting a weak start for the local bourse.
Government bonds firmed with the rand. The yield on the benchmark 2015 was down 5.5 basis points at 8.885 percent while that for the 2036 note shed 6 basis points to 8.165 percent.
