Rand gains for second day

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IOL world currency1 Graphic: Renjith Krishnan.

Cape Town - The rand gained for a second day, paring its weekly decline, as commodity prices rallied after concern waned that the US Federal Reserve may curtail stimulus measures that have boosted demand for high-yielding assets.

South Africa’s currency climbed 0.3 percent to 8.8666 per dollar by 9:17 a.m. in Johannesburg, cutting its fall this week to 0.1 percent.

Yields on benchmark 10.5 percent bonds due December 2026 were unchanged at 7.25 percent after rising four basis points, or 0.04 percentage point, yesterday.

Fed Chairman Ben S. Bernanke minimised concerns that the central bank’s easy monetary policy has spawned economically risky asset bubbles.

His comments were published after several US Federal Reserve policy makers said the central bank should be ready to vary the pace of its $85 billion of monthly bond purchases, according to minutes of their meeting released yesterday.

Metals including copper and platinum advanced.

“The effects of the Fed minutes that appeared to spook investors yesterday are reversing to some extent today with all the commodity currencies making back some ground,” Quinten Bertenshaw, a Johannesburg-based analyst at ETM Analytics, said in e-mailed comments.

“The implication for the rand is that there has been an improvement in sentiment.”

Industrial metals rose, paced by a 1.7 percent gain in nickel. Copper climbed 0.7 percent to $7,916.25 a metric ton.

Platinum led a rebound in precious metals, adding 0.9 percent to $1,629.50 an ounce.

Metals and other mining commodities accounted for 53 percent of South Africa’s exports in 2012, according to government data.

Bernanke brushed off the risks of asset bubbles in response to a presentation on the subject from a group of investors and dealers this month, according to three people with knowledge of the discussions.

Among the concerns raised, according to one person, were rising farmland prices and the growth of mortgage real estate investment trusts.

Falling yields on speculative-grade bonds also were mentioned as a potential concern, two people said. - Bloomberg News


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