Johannesburg - The rand gained to the strongest level in two weeks as emerging markets were bolstered by better-than-estimated Chinese trade data that eased concern the global economy is slowing.

South African bonds advanced.

Exports from China, the biggest buyer of South African raw materials, jumped 10.6 percent in January, beating the 0.1 percent median estimate in a Bloomberg survey.

Imports gained 10 percent and the trade surplus widened.

US Federal Reserve Chairman Janet Yellen yesterday repeated the central bank’s outlook for further monetary stimulus reductions in “measured steps” and said that paring of asset purchases are not on a “pre-set course.”

The rand’s gains “occurred into favourable signals in China’s trade data for January, which likely eased heightened concerns about the country’s growth performance,” Bruce Donald, a currency strategist at Standard Bank Group Ltd. in Johannesburg, said in a note to clients.

Yellen’s comments “appeared to contribute to a decline in global risk aversion,” supporting the rand, he said.

The currency strengthened as much as 0.3 percent to 10.9295 per dollar, the strongest intraday level since January 29.

It traded 0.2 percent stronger at 10.9427 by 10:15 a.m. in Johannesburg, extending yesterday’s 1.6 percent gain.

Yields on benchmark bonds due December 2026 fell two basis points, or 0.02 percentage point, to 8.73 percent.


Retail Sales


Growth in Chinese imports “appears particularly encouraging” for commodity exporters such as South Africa, Donald said.

China buys about 11 percent of the nation’s exports, according to government data.

Retail sales growth in Africa’s biggest economy probably fell to 2.8 percent in December from 4.2 percent the previous month, a report may show at 1 p.m., according to the median estimate of 12 economists in a Bloomberg survey.

The Federal Open Market Committee said last month it will cut monthly bond purchases by $10 billion to $65 billion.

A Fed paper yesterday acknowledged that the central bank’s policy changes would have a negative effect on some emerging markets, listing Turkey, Brazil, India, Indonesia and South Africa as the most vulnerable, in that order.

“What’s interesting is how every study comes to the same conclusion on South Africa: once you look past the headline current-account deficit, South Africa is not as vulnerable as the other countries,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in a note to clients.

Foreign investors bought a net 808 million rand ($74 million) of South African bonds yesterday, according to JSE Ltd. data. - Bloomberg News