Picture: THINKSTOCK
Picture: THINKSTOCK

The South African bond market was stable on Tuesday morning, shrugging off Public Protector Busisiwe Mkhwebane’s recommendation that the Reserve Bank’s constitutional mandate be changed from protecting the value of the rand to protecting South Africans’ "socioeconomic wellbeing".

Mkhwabane’s recommendation, made on Monday, stemmed from conclusions of her final report on the government’s failure to recover funds extended to Bankorp, which was bought by Absa in 1992.

The rand weakened more than 2% against the dollar after the comment was made on Monday.

Bonds, which usually track the rand, also weakened as foreign investors sold local bonds.

Rand Merchant Bank analyst Stephan Pienaar said the mild foreign selling of local assets, combined with losses seen in the rand and bonds, showed that markets were not panicking and "losses were likely to remain contained" as the policy was not likely to result in changes anytime soon.

The Bank said in a note that if Mkhwebane’s recommended amendment were effected, it would strip the Bank of its key competency to protect the value of the rand the role it played in securing price stability.

"The Reserve Bank had consulted its legal team and has been advised that the remedial action prescribed by the Public Protector fell outside her powers and was unlawful."

At 09.01am the R186 was bid at 8.54% from Monday’s 8.55% and the R207 at 7.5% from 7.505%.

The rand was at R12.9657 to the dollar from R12.9891.

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