Bloomberg News

Rand Gains as Backing for European Rescue Fund Looks Likely

October 12, 2011

Oct. 12 (Bloomberg) -- The rand strengthened, reversing an earlier decline, as European plans to tackle its sovereign-debt crisis helped ease concern for the global economic recovery.

South Africa’s currency advanced 0.4 percent to 7.8829 per dollar by 8:55 a.m. in Johannesburg. Earlier, the currency traded 0.8 percent lower at 7.9759. Bonds advanced, with 10-year bond yields declining 2.6 basis points, or 0.026 percentage points, to 8.061 percent.

German Chancellor Angela Merkel said backing for the European Financial Stability Facility should be in place by Oct. 23. The EFSF was rejected by Slovakia yesterday, the last of the 17 euro-zone members to approve the mechanism. Slovakia’s parliament is expected to approve Europe’s enhanced bailout plan in its second vote, European Union Trade Commissioner Karel De Gucht said.

“It’s all now down to the politicians and what they conjure up,” David Gracey, head of currency and derivatives trading at Investec Bank Ltd. said by phone. “We are going to see volatility until we get some resolution as far as the European vote is concerned. Until we get some clarity, we are really not ready to call the direction one way or another.”

--Editors: Gavin Serkin, Peter Branton

To contact the reporter on this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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