Cape Town - The South African rand advanced for the first time in five days as traders bet yesterday’s drop to a five-year low was overdone.
The rand’s stochastic oscillator versus the dollar rose to 89 today, above the 70 threshold that indicates the currency fell too far.
The gauge has been above that level for the past two weeks. Lonmin Plc and Impala Platinum Holdings Ltd., two of the world’s top three platinum producers, will start receiving strike notices within days after a South African union called for a stoppage over pay.
“The market is heavily oversold and ripe for a pullback,” John Cairns, a currency strategist at Rand Merchant Bank, said in an e-mail.
“Local news remains negative, although it doesn’t really seem to be the market’s focus.”
The rand gained 0.3 percent to 10.8553 per dollar by 12:05 p.m. in Johannesburg.
The currency has depreciated 2 percent this week.
Yields on benchmark rand bonds due December 2026 fell two basis points to 8.33 percent, trimming a five-day increase to 14 basis points. - Bloomberg News