JOHANNESBURG (Reuters) - South Africa's rand struggled to regain strength on Wednesday after hitting a four-year low earlier this week and is likely to remain under pressure due to foreign bond holders exiting the market.
The rand was at 9.0434 to the dollar at 0643 GMT, slightly weaker than its close in New York on Tuesday.
Portfolio outflows of up to 4 billion rand from the bond market since mid-January have weighed on the currency, while labour unrest has also fuelled negative sentiment about Africa's largest economy.
"Portfolio outflows from the local bond market remain a real concern, given that we have seen 4 billion rand of outflows since mid-January," analysts at Absa Capital wrote in a note published on Wednesday.
"Further capitulation by these foreign bond holders likely would result in extended rand weakness and could create a reinforcing spiral for both the rand and South African bond market in the near term."
Government bonds continued to soften and the yield on the 2026 paper edged up 3 basis points to 7.495 percent while that on the 2015 issue was 2 basis points higher at 5.435 percent.
Source: http://news.yahoo.com/africas-rand-under-pressure-amid-portfolio-outflows-070454733--finance.html
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