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Oil price rebound erodes gains by rand

The rand sunk 0.51 percent to 11.4300 per dollar also giving up a third of a percent against the euro.

Picture: EWN.

JOHANNESBURG - The rand along with government bonds retreated on Wednesday, as a rebound in the oil price and the expected return of strong dollar performance turned the tide on global risk sentiment that had seen the domestic market rally.

By 1512 GMT the rand had sunk 0.51 percent to 11.4300 per dollar, while also giving up a third of a percent against the euro, as the price of Brent crude paused at $56.86 following a 20-percent surge in the past four sessions.

Local bonds were also weaker, the yield on the paper due in 2026 shooting up 16 basis points to 7.335 percent, its highest level in two-weeks, as fixed income buyers cashed-in on the recent rally and looked overseas to oil-linked assets.

"Clearly there's been a change. Everyone was piling into our bonds and so positive about the oil price falling," said Marten Banninga, a trader at investment house World Wide Capital Securities.

The local unit also came under pressure from bets by traders that the US dollar was poised to return to strong trade after recent falls.

Earlier, HSBC's Purchasing Managers' Index (PMI) fell to 49.8 as companies reported declines in output and new orders while new export orders were also down.