Johannesburg - South Africa's rand held its ground against the dollar on Thursday as investors moved back into high-yielding assets following the release of weak US retail data.
Central bank governor Lesetja Kganyago however hinted that he expected an eventual flight of capital from local markets as US interest rates were likely to rise with a recovery in the world's biggest economy.
The rand traded at 11.8640/dollar on Thursday morning, up slightly from Wednesday's close and after pushing to two-week highs in the previous session.
The dollar languished near three-month lows after surprisingly soft retail sales prompted some investors to wonder if the Federal Reserve can afford to hike interest rates at all this year.
“For the interim, I guess the market will be happy to ease into high yielding assets,” Standard Bank trader Maemo Rametse said.
“There are a lot of international investors who are slightly underweight South African assets in their respective portfolios so look for this money to start finding its way.”
In fixed income, government bonds were slightly weaker, with the yield on 2026 debt, edging up 1.5 basis points to 8.14 percent.
Reuters