Rand rally loses steam after U.S. biotech sell-off
JOHANNESBURG (Reuters) - South Africa's rand weakened slightly on Friday, losing some of its recent momentum after a major sell-off of U.S. biotech shares reduced investors' broader appetite for risky assets. The rand was trading at 10.4775 to the dollar at 0605 GMT, marginally weaker than its New York close of 10.4700. On Thursday the rand reached a session high of 10.3600, its strongest level this year, against a dollar weakened overnight by the release of U.S Federal Reserve monetary policy minutes that proved more dovish than expected. Analysts said the rand was likely to stay on the back foot after a bio-tech sell-off in U.S markets and with national elections looming on May 7, although there is little chance of it falling to its January and early February levels, when it was trading much weaker than 11.000 to the dollar. "The overnight near-panic selloff in biotech stocks has hit risk appetite hard and is leading to a sharply weaker rand," John Cairns, an emerging markets analyst for Rand Merchant Bank, said in a note. "USD/ZAR is already at 10.47 and risks moves into the 10.50s early this morning, though we doubt the sell-off will extend as far as 10.60." Government bonds remained steady, with yields for the benchmark 2026 paper up just 2 basis points to 8.275 percent and that on the 2015 note staying flat at 6.680 percent.
