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Johannesburg - The rand convincingly broke through R10.50 per dollar resistance on Thursday, buoyed by euro gains and the possibility of an end to a three-week metal workers' strike.
Analysts said investors were also relieved by evidence, through inflation data in the previous session, that the SA Reserve Bank (Sarb) was taking the right policy path by setting out on a gradual interest rate tightening cycle.
The SARB raised rates by 25 basis points to 5.75% last week to curb inflationary pressures, saying the hike should be seen in conjunction with a 50 basis point increase in January, when the rand had plunged to five year lows.
One of South Africa's striking unions broadly accepted a wage increase offer of up to 10% on Thursday, which is likely to take some 20 000 metal workers out of the strike.
At 17:03, the rand traded at R10.49 to the dollar, up 0.2% from its close in New York on Wednesday. It earlier hit a session high of R10.466, making a convincing break through R10.50 resistance, which traders say opens up the R10.30 to R10.40 space. It was last at these levels on May 30.
"In the near term it does look like the Sarb has managed to put a lid on dollar/rand gains and a break below R10.50 to targets in R10.30 to R10.40 is possible," said Anisha Arora, emerging market analyst at 4Cast.
However, strike concerns, global geopolitical risks and a generally poor domestic economic outlook could see the rand resume a weaker trend, Arora cautioned.
Yields on government bonds were up 3.5 basis points to 8.15% on the benchmark 2026 issue and rose 1 basis point to 6.65% on the 2015 note.
Analysts said investors were also relieved by evidence, through inflation data in the previous session, that the SA Reserve Bank (Sarb) was taking the right policy path by setting out on a gradual interest rate tightening cycle.
The SARB raised rates by 25 basis points to 5.75% last week to curb inflationary pressures, saying the hike should be seen in conjunction with a 50 basis point increase in January, when the rand had plunged to five year lows.
One of South Africa's striking unions broadly accepted a wage increase offer of up to 10% on Thursday, which is likely to take some 20 000 metal workers out of the strike.
At 17:03, the rand traded at R10.49 to the dollar, up 0.2% from its close in New York on Wednesday. It earlier hit a session high of R10.466, making a convincing break through R10.50 resistance, which traders say opens up the R10.30 to R10.40 space. It was last at these levels on May 30.
"In the near term it does look like the Sarb has managed to put a lid on dollar/rand gains and a break below R10.50 to targets in R10.30 to R10.40 is possible," said Anisha Arora, emerging market analyst at 4Cast.
However, strike concerns, global geopolitical risks and a generally poor domestic economic outlook could see the rand resume a weaker trend, Arora cautioned.
Yields on government bonds were up 3.5 basis points to 8.15% on the benchmark 2026 issue and rose 1 basis point to 6.65% on the 2015 note.
