May 22, 2018 / 6:57 AM / a month ago

South Africa's rand firmer as dollar bulls take a breath

JOHANNESBURG, May 22 (Reuters) - South Africa’s rand was firmer on Tuesday, swinging back from a five-month low as investors pocketed profits from the recent rise in the dollar and braced for local interest rate and credit rating decisions due later in the week.

* At 0645 GMT the rand was 0.39 percent firmer at 12.6300 per dollar compared to Monday’s low of 12.8950, its weakest level since December.

* “The dollar is overbought and a correction phase is imminent in our opinion,” said analysts at Nedbank in a note.

* The greenback retreated from five-month highs and U.S. Treasuries also softened from seven-year highs, allowing some reprieve for emerging market currencies which have been battered by the surge in U.S. assets.

* South Africa’s central bank announces its decision on lending rates on Thursday while ratings firms Fitch and Standard & Poor’s are set to take ratings action on Friday.

* The Reserve Bank (SARB) is expected to keep interest rates unchanged at 6.5 percent at Thursday’s meeting, by all 25 economists surveyed by Reuters last week.

* Bonds were also firmer with the yield on the benchmark paper due in 2026 down 5.5 basis points to 8.62 percent.

* Stocks were due to open lower when trade commences at 0700 GMT, with the JSE’s Top-40 futures index down 0.34 percent. (Reporting by Mfuneko Toyana Editing by Ed Stoddard)

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