South African rand firms on softer oil; coalition talks in focus
USO•The rand rose about 0.4% to 16.4875 per dollar as softer oil prices eased inflation concerns and investors watched municipal election results and coalition talks. South Africa’s 2035 government bond was flat, with its yield at 8.3%.
1. Rand strengthens
The South African rand strengthened in early trade on Monday, gaining about 0.4% to 16.4875 against the dollar by 0642 GMT. Softer oil prices helped ease inflation concerns.
2. Election talks in focus
Investors assessed the outcome of local municipal elections and coalition talks. The African National Congress suffered a significant setback in last week’s municipal elections, weakening its position in negotiations to form city governments.
3. Oil and bonds
South Africa is a net fuel importer, so sustained increases in crude prices can raise domestic fuel costs, stoke inflation and add pressure on the rand. The benchmark 2035 government bond was flat in early deals, with its yield at 8.3%.
