Turkey’s decision to raise rates leads to improvement in SA’s bonds

South African government bonds were stronger on Thursday morning, benefiting from overnight gains in the rand, following a move by the Turkish central bank to raise its lending rate 3% to 16.5%.

“What a difference an emergency hike of 300 basis points in Turkey does to the market. This interest-rate hike was the desperate measure that the Turkish central bank resorted to curb the rampant inflation that’s currently causing a bit of havoc in Turkey,” said TreasuryOne currency dealer Andre Botha.

Markets were also digesting US Federal Reserve minutes, with the world’s most influential central bank signalling that it would raise interest rates in June, with two more increases pencilled in for 2018.

Local focus remains on the Reserve Bank, which will announce its latest stance on monetary policy at about 3pm.