South African Bonds Moved Positive on Oil, Dollar Weakness

South African bonds moved into double-digit positive territory during the morning session amid a weak dollar and strong rand aided views that imported oil inflation would be lower, Cbonds.info reported.

By 12:13 the short-term government R153 bond was at 11.370% from its previous close of 11.475%, while the medium-term R157 was at 10.430% from 10.555% at the previous close. The long-term R186 was bid at 10.165% from 10.295% before.

The rand was last bid at 7.6220 per US dollar from its overnight close of 7.6560.

"We are stronger mainly on the rand. The rand strength is pretty drastic, although it is on a weaker dollar and strong euro, but it does mean imported oil inflation will be lower," said a bond portfolio manager.

Lower inflation expectations will help bond yields recover as it means lending rates may not ratchet up as high as initially expected. The two key drivers of inflation in South Africa have been oil and food.

Dow Jones Newswires reports investors taking profit sent oil prices lower by more than one dollar on Monday after supply worries helped push prices to a record high last week.