S.Africa rand edges firmer on higher risk appetite

JOHANNESBURG (Reuters) - South Africa's rand firmed against the dollar on Monday, helped by better appetite for risky assets after markets were rattled last week by debt concerns in Dubai.

Traders said the rand was little affected by data showing demand for credit by South Africa's private sector fell for the first time since 1966 in October, pointing to tight credit conditions that will lead to a slow recovery from recession.

At 0641 GMT the rand traded 0.5 percent firmer at 7.3750 versus the dollar after closing Friday's session at 7.4120.

"This week we've got a heavy (global) data calender and the market continues to digest concerns about Dubai and the potential for intervention in the yen," said Absa Capital trader Duncan Howes.

"All of this is going to keep volatility in foreign exchange markets quite elevated. This morning we'll probably find some support for risky assets as there's been some relief in the Dubai story, so risky assets are rebounding quite strongly after Friday," he added, predicting the rand could test stronger levels around 7.30/32.

The United Arab Emirates offered banks emergency support on Sunday, the first steps to ease fears that a looming debt default by two of Dubai's flagship firms could derail the global economic recovery.

Part of the rand's gains came after data showed credit demand fell by 0.42 percent year-on-year in October from a 1.49 percent growth in September, but there was no real link, Howes said, adding: "The broader global market events are overshadowing local data at this stage."

South African government bonds followed the rand firmer, and yields inversely edged lower, with the 2015 bond yield dipping 2.5 basis points to 8.44 percent.

The yield on the 2036 note was down 4 basis points at 8.93 percent.