Johannesburg - The rand is expected to remain range-bound as the ANC moves closer to re-appointing President Jacob Zuma as its leader, reducing the uncertainty hanging over December’s internal party election.
Rand steady on Zuma ‘re-election’
The rand was at 8.8680 to the dollar at 0639 GMT, largely in line with its New York close on Monday.
The rand firmed against the dollar on Monday after South Africa's Purchasing Managers' Index rose in November, signalling an improvement in the domestic manufacturing sector.
However, the currency is unlikely to break out of the 8.80-9.00 range in the short term as trade thins towards the end of the year.
“The market is very range-bound and lacklustre as we go into the end of the year,” said Brigid Taylor, head of institutional sales at Nedbank.
Taylor added that more clarity about the outcome of the ANC's election, in Mangaung on December 16-20, could help to stabilise the rand.
Five of South Africa's nine provinces have formally backed President Jacob Zuma to stay on as leader of the ANC, giving him enough support to win re-election.
Businessman Cyril Ramaphosa, a prominent union leader in the struggle against apartheid, is also in the frame as a potential deputy.
“For now the market has had its expectations managed with regards to the fact that Zuma and Ramaphosa will probably take the ANC to elections in 2014,” Taylor said. “It will really boil down to what the fiscal policy looks like as we go into 2013.”
The yields on the 2026 bond fell 2 basis points to 7.585 percent and that on the 2015 paper was 2.5 basis points lower at 5.5 percent. - Reuters