Cape Town - The rand surged to the strongest level in more than two weeks against the dollar as continued negotiations among US lawmakers to avoid a default fuelled demand for riskier assets.
South Africa’s currency headed for a second weekly advance after US Republicans and President Barack Obama pledged further discussions on a debt-limit increase and government shutdown.
A strike at Anglo American Platinum Ltd. ended after the world’s biggest producer of the metal and the largest union at its South African operations reached a compromise settlement over plans to cut jobs.
“Markets took heart from the apparent progress in resolving the US fiscal impasse,” Bruce Donald, a currency strategist at Standard Bank Group Ltd. in Johannesburg, and colleagues said in an e-mailed note.
The rand’s gain followed “a rise in global risk appetite and a stronger performance from emerging-market currencies,” they said.
The currency appreciated as much as 0.4 percent to 9.8673 per dollar, the highest intraday level since September 25.
It traded 0.2 percent stronger at 9.8925 as of 10:36 a.m. in Johannesburg, bringing its advance this week to 1 percent.
Yields on benchmark 10.5 percent bonds due December 2026 dropped six basis points, or 0.06 percentage point, to 7.91 percent, giving a decline of 10 basis points this week.
Obama and Republican leaders met for 90 minutes at the White House yesterday after House Speaker John Boehner said he would offer a measure to postpone a potential default to November 22 from October 17.
The two sides planned further talks among their staff members last night to address the president’s insistence that Republicans agree to fund the government before starting broader fiscal talks.
The Anglo Platinum accord ends a work stoppage that started on September 27 and cost the company 44,000 ounces of platinum output.
The Association of Mineworkers and Construction Union had challenged Amplats’ decision set out in August to consolidate five mines into three at its Rustenburg complex in a bid to boost profit.
The operations are losing more than 1 billion rand ($100 million) every six months, chief executive Chris Griffith said July 22. - Bloomberg News