Bloomberg News

Rand Rallies Most in a Month on U.S. Retail Sales, EU Measures

November 29, 2011

Nov. 28 (Bloomberg) -- The rand advanced the most in a month as record U.S. Thanksgiving retail sales and speculation European policy makers are taking steps to stem the debt crisis boosted commodity prices and riskier emerging-assets.

South Africa’s currency gained as much as 2.8 percent to 8.3122 per dollar and traded 2.7 percent firmer at 8.3122 as of 4:17 p.m. in Johannesburg, making it the second-best performer today among more than 20 emerging-market currencies tracked by Bloomberg. The rand declined 4 percent last week, its worst five-day performance in two months.

The MSCI All Country World Index has slumped 7.4 percent this month as concern Europe’s crisis will spread spurred a surge in Italian borrowing costs. German Finance Minister Wolfgang Schaeuble urged fast-track treaty changes to tighten budget discipline to calm markets. U.S. retail sales during Thanksgiving climbed 16 percent to a record.

“Last week’s renewed fears over the global economy and debt woes in the U.S. and Europe have seemingly eased,” Nomvuyo Guma, a Johannesburg-based currency strategist at Standard Bank Group Ltd., and colleagues wrote in e-mailed comments. “Weekend reports suggesting an improvement in U.S. consumer spending over the Thanksgiving holiday appear to have boosted sentiment.”

Emerging-market stocks climbed the most in more than three weeks, while the Standard & Poor’s GSCI index of raw materials advanced the most in a month. South Africa’s benchmark stock index headed for its highest close in more than a week as shares in commodity exporters including Anglo American Plc and BHP Billiton Ltd. rose.

“With equity indicators pointing to a positive U.S. opening, commodity prices firmer and the rand already strengthening this morning, it could manage to regain some ground today,” Guma said.

Italy Report

Earlier, La Stampa reported the International Monetary Fund is preparing a 600 billion-euro ($799 billion) loan for Italy in case the debt burden worsens, without saying where it got the information. An IMF official denied the Washington-based lender is in talks with Italy about a loan program.

“Global markets returning after the Thanksgiving break appear to be in positive mood amid talk, speculation, albeit denied by the IMF, of some bail-out package being prepared for Italy,” Tim Ash, head of emerging-market research at Royal Bank of Scotland Group Plc in London, said in an e-mailed note. “The fact that markets are rallying suggests short positioning generally, and perhaps an unwillingness now to get too short this side of the European policy makers’ crisis meetings planned for early next month.”

Bonds strengthened ahead of third-quarter growth data tomorrow that is expected to show South Africa’s economy accelerated by an annualized 1.8 percent in the three months to September from 1.3 percent in the second quarter and 4.5 percent in the first quarter of 2011, according to a Bloomberg survey of 18 analysts.

The yield on South Africa’s 13.5 percent bonds due 2015 declined eight basis points, or 0.08 percentage point, to 7.003 percent, following last week’s 29 basis-point increase.

--Editors: Peter Branton, Ash Kumar

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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