South African rand flat as investors mull US Treasury move

The South African rand was little changed during early Thursday dealings, holding at 16.09 against the dollar, according to Business Recorder, which carried a Reuters report. Global investors held back from taking large positions while they weighed a surprise announcement from the US Treasury. The Treasury said it would expand its buybacks of longer-dated government bonds to support market liquidity, a move that pushed the greenback lower against several other currencies.

The announcement followed a sharp sell-off in bonds, as investors pushed for higher yields amid greater inflation concerns tied to the conflict involving the US, Israel and Iran. ETM Analytics said the measure lifted appetite for risk worldwide and increased interest in higher-yielding holdings, South African debt among them. Adam Phillips of Umkhulu Treasury expected the currency to stay within a range through the remainder of this week.

Early in the session, the benchmark 2035 bond held firm, its yield slipping to 8.465%, a drop of half a basis point. Risk-sensitive currencies such as the rand often take their direction from global events when local economic releases are scarce.