JOHANNESBURG, Oct 22 (Reuters) – The South African rand was stronger on Tuesday, buoyed by global precious metals prices and its appeal for carry trades.
At 1502 GMT, the rand traded at 17.5050 against the dollar , 0.6% stronger than its closing level on Monday.
Carry trades involve investors borrowing funds in countries with low interest rates and putting the money in countries with higher rates.
ETM Analytics said in a research note that a rise in domestic bond yields should ensure the rand retains its ability to attract portfolio inflows.
“Another factor worth considering is the performance of the gold price … versus an oil price which remains more subdued, to ensure that SA’s (South Africa’s) terms of trade remain supportive,” it added.
Focus on Wednesday will turn towards September inflation figures. Economists polled by Reuters expect year-on-year inflation last month of 3.9%.
South Africa’s benchmark 2030 government bond was stronger, with the yield down 2 basis points to 9.325%.
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Reporting by Tannur Anders and Bhargav Acharya; Editing by Louise Heavens and Mark Potter
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