Oct. 28 (Bloomberg) -- The rand declined, paring its best weekly gain against the dollar in 11 months, as optimism over a European Union plan to contain the region’s debt crisis waned, damping demand for riskier emerging-market assets.
South Africa’s currency weakened 0.3 percent to 7.7409 per dollar as of 4:27 p.m. in Johannesburg, after appreciating as much as 0.5 percent to its strongest level since Sept. 20. The retreat pared the rand’s gain this week to 3.8 percent, the most since the five days ending Dec. 3.
The rand dropped from a six-week high reached yesterday after leaders agreed to boost the region’s bailout fund and write down Greek debt. The euro, the currency of a third of South Africa’s trade, declined today after Italy sold less than its target at a bond auction and Fitch Ratings said the debt plan amounts to a Greek default.
The euro-area summit’s “initial burst has faded,” John Cairns and Nema Ramkhelawan-Bhana, currency strategists at Rand Merchant Bank in Johannesburg, wrote in e-mailed comments. “No one seems completely inspired by the package or seems to completely understand it either.”
The plan was hailed by U.S. President Barack Obama as an “important first step” to resolve the crisis.
South Africa’s 6.75 percent securities due 2021 yielded 7.85 percent, little changed from yesterday’s close. The yield is down 20.2 basis points, or 0.202 percentage point, this week.
--With assistance from Stephen Gunnion in Johannesburg. Editors: Linda Shen, Alex Nicholson
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