Rand outpaces emerging currency gains

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Johannesburg - South Africa’s rand strengthened against the dollar, outpacing gains among emerging-market peers, after reports showed manufacturing production unexpectedly expanded and mining output rose more than estimated.

All but three of 24 major emerging-market currencies tracked by Bloomberg advanced or were unchanged against the dollar, while the rand rose against all 16 major currencies.

Manufacturing increased 1.5 percent in October from a year earlier, compared with a 2 percent contraction predicted by 17 economists in a Bloomberg survey and a 3.3 percent decline the previous month.

Mining jumped 22 percent year-on-year in October, led by a 74 percent surge in gold output, the statistics agency said today.

“Those sectors are starting to recover,” Ion de Vleeschauwer, chief currency dealer at Bidvest Bank Ltd., said by phone from Johannesburg, in reference to mines and factories.

“We can do with some good news.”

The rand gained as much as 1.2 percent to 10.2722 per dollar, its best intraday level in a week.

It traded 0.8 percent stronger at 10.3127 by 2:57 p.m. in Johannesburg.

Yields on rand-denominated government debt due February 2023 fell two basis points, or 0.02 percentage point, to 7.97 percent after falling 12 basis points yesterday.

Foreign investors bought a net 2 billion rand ($194 million) on bonds in the two days through yesterday, snapping 13 days of outflows, the longest stretch of net sales on record, according to data from the Johannesburg Stock Exchange.

Foreigners have sold a net 3.1 billion rand of debt this month after net outflows of 14.83 billion rand in November, the most in a month since at least September 2011, according to Johannesburg Stock Exchange data.

Good Buying

“Foreign investments are arriving to rebuild sold-off positions,” John Cairns, currency strategist at FirstRand Ltd.’s Rand Merchant Bank unit, said in an e-mailed note to clients today.

“There have been two days of good bond buying.”

Africa’s largest economy will expand 1.9 percent this year, the slowest growth since the 2009 recession, according to central bank estimates.

Strikes by workers at South Africa’s mines and automakers this year have curbed output.

The rand, which has weakened 18 percent against the dollar this year, fell to a 4 1/2-year low on December 6. - Bloomberg News

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