Bloomberg News

Rand Gains to Two-Week High as PMI Rises, EU Debt Concern Eases

December 01, 2011

Dec. 1 (Bloomberg) -- The rand climbed to a two-week high after South Africa’s purchasing managers index unexpectedly rose in November and as Spain and France sold bonds, easing concern the euro region’s debt crisis is set to worsen.

South Africa’s currency advanced as much as 0.6 percent to 8.0842 per dollar, the strongest level since Nov. 15. It traded 0.5 percent stronger at 8.0952 as of 2:41 p.m. in Johannesburg, a fourth day of gains. Against the euro, it appreciated 0.2 percent to 10.9168.

The purchasing managers’ index rose to 51.6 in November from 50.5 a month earlier, Johannesburg-based Kagiso Tiso Holdings said in an e-mailed statement today. This was the second month in a row the reading is above 50, indicating an expansion in factory output. The median estimate of economists in a Bloomberg survey was for the index to fall to 49.9.

“The increase in the PMI bodes well for South Africa’s economic growth outlook, especially given the manufacturing sector’s poor showing in the third quarter,” Tebogo Mosepele, a Johannesburg-based analyst at Standard Bank Group Ltd., said in e-mailed comments. “The data is rand-positive from a gross domestic product-differential perspective.”

Spain and France sold 8.1 billion euros ($10.9 billion) of bonds today, sending yields lower across Europe, after six central banks led by the U.S. Federal Reserve agreed yesterday to cut the cost of providing dollar funding via swap agreements and to make other currencies available as needed.

Monetary Loosening

Emerging-market stocks gained, driving the benchmark index to its steepest four-day gain in more than two years, as investors bet the central banks’ intervention will restore growth. South Africa’s commodity exporters including Anglo American Plc and BHP Billiton gained for a second day, while gold miners including AngloGold Ashanti Ltd. advanced as the price of the metal climbed.

“The biggest central banks in the world are all engaged in monetary loosening,” Quinten Bertenshaw, a Johannesburg-based analyst at Tradition Analytics, and colleagues said in a research note. “As a result, one can expect to see a wave of inflows hit South African shores to bid up local asset prices in coming months. The risk of holding a long-dollar position has just ratcheted higher.”

Foreign investors bought a net 2.57 billion rand ($317 million) of South African stocks yesterday, the most in a day since April 2010, according to JSE Ltd. data.

South Africa’s 13.5 percent bonds due 2015 gained for a fourth day, driving the yield three basis points, or 0.03 percentage points lower to 6.758 percent. The yield dropped 18 basis points yesterday.

--Editors: Linda Shen, Ana Monteiro

To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net

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


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