Rand firms on the back of euro rally

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Johannesburg - South Africa's rand firmed on Monday against the dollar, boosted by the regional elections in Spain over the weekend, which removed a potential obstacle to the country seeking a bailout.

The rand was almost half a percent firmer at 8.6230 against the greenback compared to Friday's close of 8.6650, buoyed by a rally in the euro after the Spanish election results, the currency of its largest trading partner.

Spain has fallen into its second recession since 2009 and the International Monetary Fund forecasts the economy will contract by 1.3 percent next year.

“The euro is a bit stronger, the dollar weak on the day, there is some importer demand here at 8.60,” said Jan Defouw, a trader at Standard Bank.

Bonds were little moved ahead of critical inflation data this week which will set the tone interest rates.

The three year edged up half a basis point to 5.395 percent while the 14-year paper rose 1.5 basis points to 7.58 percent.

Investors will also pay close attention to Finance Minister Pravin Gordhan's presentation of the Medium Term Budget (MBPS) to parliament on Thursday, outlining the country's spending plans for the next three years.

“The MBPS will provide a deluge of National Treasury macroeconomic projections for the coming years,” said Absa Capital in a note, adding some response to the recent industrial turmoil would be looked for.

South Africa is struggling to resolve violent unrest that has poisoned industrial relations and marred its image overseas. On Monday the commission investigating the killing of 34 miners by police on August 16 heard opening statements. - Reuters