South African rand supported by carry trade and precious metals
Updates prices to reflect afternoon trade
JOHANNESBURG, Oct 22 (Reuters) -The South African rand was stronger on Tuesday, buoyed by global precious metals prices and its appeal for carry trades.
At 1502 GMT, the rand traded at 17.5050 against the dollar ZAR=D3, 0.6% stronger than its closing level on Monday.
Carry trades involve investors borrowing funds in countries with low interest rates and putting the money in countries with higher rates.
ETM Analytics said in a research note that a rise in domestic bond yields should ensure the rand retains its ability to attract portfolio inflows.
"Another factor worth considering is the performance of the gold price ... versus an oil price which remains more subdued, to ensure that SA's (South Africa's) terms of trade remain supportive," it added.
Gold XAU= hit an all-time peak on Tuesday, while platinum XPT= also rose. Those precious metals are key South African exports.
Early on Tuesday, central bank data showed a leading business cycle indicator fell 0.7% in August ZALEAD=ECI, erasing the previous month's increase.
While there has been a pickup in business confidence in South Africa ZABCI=ECI since the formation of a coalition government in June and strength in retail sales ZARET=ECI recently, other sectors like mining ZAMNG=ECI remain in a slump.
Focus on Wednesday will turn towards September inflation figures. Economists polled by Reuters expect year-on-year inflation last month of 3.9%.
On the stock market, the Top-40 .JTOPI index closed about 0.4% lower.
South Africa's benchmark 2030 government bond ZAR2030= was stronger, with the yield down 2 basis points to 9.325%.
Reporting by Tannur Anders and Bhargav Acharya; Editing by Louise Heavens and Mark Potter
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
