Rand stutters as low liquidity pauses rally

February 4, 2016 8:01 AM

"It's the sharp turnaround in the currency that has led to the bonds being taken. But its being done on really thin volumes this morning," said bond trader at World Wide Capital Securities Dale Forssman.

South African bank notes featuring an image of former South African President Nelson Mandela are displayed at an office in Johannesburg January 17, 2013. REUTERS/Siphiwe Sibeko

South Africa's rand weakened slightly in early trade on Thursday but remained below the crucial 16.00 mark while yields on bonds fell sharply with appetite for emerging assets returning as oil prices recovered.

Stocks were set to open firmer at 0700 GMT, with the JSE securities exchange's Top-40 futures index adding 1.25 percent.

At 0645 GMT the rand had slipped 0.43 percent to 15.9980 per dollar, surrendering overnight gains that saw the unit reach 15.9200, as low liquidity in global markets capped gains ahead of employment data from the United States on Friday.

The benchmark government bond due in 2026 shed 14.5 basis points to 9.135 percent, just shy of its firmest in two months.

Bonds fed-off the currency's overnight rally as yields fell, with sentiment towards emerging markets aided by rising crude prices, after talk of producers potentially meeting to discuss output cuts lifted the oil market.

South Africa expects January business confidence indicators at 0930 GMT. The index is currently languishing at its lowest level in 23 years.