JOHANNESBURG (Reuters) - South Africa's rand steadied against the dollar on Friday, partly supported by the central bank's decision to keep interest rates on hold, but concerns over local strikes and a weak economic outlook should restrict significant gains.
The rand traditionally tends to track the euro because of South Africa's strong trade ties with Europe, but Reserve Bank Governor Gill Marcus noted on Thursday the currency had become increasingly sensitive to domestic factors.
At 0659 GMT the rand traded at 8.9255 against the greenback, barely changed from Thursday's close at 8.9230.
The rand has recovered some ground after breaching the 9.0 mark against the dollar earlier this week, the first time in more than 3-1/2 years.
But it remains vulnerable to an uncertain domestic climate after a wave of often-violent strikes from August triggered a sell-off of South African assets and prompted credit rating downgrades from Moody's and Standard and Poor's.
"The rand is looking a little bit better this morning but that's really because the dollar is a bit weaker in general on international markets," said Bidvest Bank chief dealer Ion de Vleeschauwer.
"The rand probably would have traded a lot stronger, especially against the crosses, but we've had massive mining violence, downgrades from just about everybody and labour unrest is still continuing and that is a problem."
Bond yields edged higher after hawkish central bank comments on Thursday about rising inflation dampened expectations of future interest rate cuts.
The yields for the benchmark 14-year bond and the three-year paper each added 1.5 basis points to 7.63 percent and 5.525 percent respectively.
Source: http://news.yahoo.com/africa-rand-steadies-local-woes-cap-gains-073730245--finance.html
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