JOHANNESBURG – South Africa’s rand edged up against the dollar in early trade on Monday, after China’s central bank stepped up efforts to stabilise the yuan, in its latest attempt to deter offshore speculation in the currency.
Stocks were set to open firmer at 0700 GMT, with the Johannesburg Securities Exchange’s Top-40 futures index up 0,82 percent.
The yuan’s slide to a near-five year low earlier this month had stirred renewed concerns about China’s economic health and the outlook for global growth, heightening investor risk aversion.
China’s central bank said on Monday it will start implementing a reserve requirement ratio (RRR) on offshore banks’ domestic deposits, in what appears to be its latest attempt to stem speculation in the yuan and manage money flowing in and out of the country.
“Efforts by the People’s Bank of China to stabilize the yuan by preventing foreign speculation are expected to benefit commodity-based currencies such as the rand today,” said Barclays Africa currency strategist Mike Keenan.
The rand was 0,16 percent firmer at 16,7550 by 0650 GMT compared with Friday’s close of 16,7820.
Still, market participants remained sceptical about the prospects for a sustained recovery as investors remain in a wait-and-see-mode until Wednesday’s local inflation data, which is expected to show the effects of a much weaker rand.
The rand had earlier touched a session low of 16,9710, with blame apportioned to low oil prices after international sanctions against Iran were lifted over the weekend.
In fixed income, the yield on the benchmark government bond maturing in 2026 added 7 basis points to 9,785 percent. – Reuters