Rand recoups as bonds firm

South Africas rand firmed against the dollar, recovering from two week low as data which showed United States unemployment claims were at a 42-month low encouraged investors to take on risk assets.According to Reuters, government bonds also got a reprieve after a sell-off this week and yields trended lower.This recovery might be short-lived though and the rand will likely maintain its weaker tone as long as the euro zone debt crisis remains unresolved.Local traders squared their books ahead of a public holiday on Friday, which is traditionally the start of Christmas holidays for most market players in South Africa.The currency is on course to register its worst yearly performance in three years, having hit a 2-1/2 year low of 8.61 in November.The rand was trading at 8.3605 against the dollar at 1533 GMT, 0.83 per cent firmer than Wednesdays New York close of 8.4307. It hit a session high of 8.33.Euro/dollar hit new highs for the day after US data showed that the American economy is at least on the right track, Christopher Shiells, emerging market analyst at IGM, said.The rand has been weaker than its 100 and 200-day moving averages since early August. Its few attempts to break firmer than 8.00/dollar since hitting 2-1/2 year highs have failed, pointing to an entrenched weak trend for the currency.That weakness could see inflation rising even higher than Reserve Banks forecasts, which have CPI staying outside the 3-6 per cent target band for most of 2012.
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