Bonds firmer amid reports Mugabe may exit presidency on Sunday
South African bonds were firmer on Friday afternoon, as the rand regained more than 1% against the dollar and pound from over-sold levels.
Traders could not immediately pinpoint the reason, as the market braced itself for a possible downgrade by ratings agencies next Friday. However, a weaker dollar and a Reuters report that President Robert Mugabe could be fired as president on Sunday, may have been factors supporting the rand and bonds.
"If [Mugabe] becomes stubborn, we will arrange for him to be fired on Sunday," a source told Reuters. "When that is done, it’s impeachment on Tuesday."
It looks like Zimbabwe may finally get a new leader, said FXTM analyst Lukman Otunuga. "A change of guard in Zimbabwe may have the potential to precipitate an economic turnaround and this has the potential to spark growth locally and in SA."
At 3pm, the R186 was bid at 9.29% from 9.35% and the R207 at 7.98% from 8.04%.
The rand was at R13.9966 to the dollar from R14.1620. The euro was at $1.1792 from $1.1768.
The dollar has been under pressure following news that US special counsel Robert Mueller had requested Russia-related documents from more than a dozen officials from President Donald Trump’s election campaign team, including his son-in-law, Jared Kushner.
The weaker dollar supported US bonds with bond yields marginally lower as prices rose in safe-haven trade.
While soft inflation has helped support US treasuries this year, many analysts believe inflation is still on a path to reach the US Federal Reserve’s 2% target, Dow Jones Newswires reported.
The 10-year bond was at 2.3656% from 2.3754%.