JOHANNESBURG (Reuters) – South Africa’s rand steadied early on Thursday, clawing back some ground after tumbling to a three month low as some investors opted to buying the currency betting the rally in the dollar and U.S. Treasuries had reached its peak.
At 0640 GMT the rand had firmed 0.16 percent to 12.4100 per dollar, having fallen as far as 12.5325 in the previous session as the greenback hit hit a four-month high on Wednesday.
Bullish sentiment also cushioned the rand’s slide after consumer confidence touched an all-time high in the first quarter of 2018, spurred by the election by parliament of Cyril Ramaphosa as president.
The 12.5000 level is seen as a fair value for the currency, which despite a sharp rally since the later part of 2017 continues to trade above its purchasing power parity level, mostly due to its high sensitivity to external factors.
In data, the statistics office publishes producer inflation figures at 0930 GMT. Overseas, investors are looking out for a European Central Bank meeting and U.S. jobless claims.
Bonds were firmer, with the yield on the benchmark paper due in 2026 down 5.5 basis points to 8.24 percent.
The stock market opened weaker at 0700 GMT, with the Top40 index down 0.4 percent to 50,038 points.
Reporting by Mfuneko Toyana; Editing by Matthew Mpoke Bigg