Bloomberg News

Rand Gains, Rebounding From 1-Week Low, After EU Budget Pact

December 09, 2011

Dec. 9 (Bloomberg) -- The rand gained the most this month against the dollar, paring its weekly decline, after the euro region’s leaders boosted a rescue fund and U.S. consumer confidence topped estimates.

South Africa’s currency advanced as much as 2.1 percent, after earlier falling 0.7 percent, and traded 1.6 percent stronger at 8.1337 per dollar as of 5:37 p.m. in Johannesburg, the biggest one-day gain on a closing basis since Nov. 30. The rand has retreated 1 percent this week.

Leaders holding all-night talks in Brussels added 200 billion euros ($267 billion) to their crisis-fighting capacity and toughened anti-deficit rules. China’s central bank may use $300 billion of its reserves to invest in the U.S. and Europe, Reuters reported. Confidence among U.S. consumers rose more than forecast in December to a six-month high, damping demand for safer assets.

“The market is retracing a little bit after yesterday’s sell-off,” Brigid Taylor, head of institutional sales at Johannesburg-based Nedbank Capital, said by phone. “We are just having to watch Europe for direction.”

The euro, the currency of South Africa’s biggest regional trading partner, gained and South Africa’s benchmark stock index pared losses. U.S. Treasuries fell as investors appetite for riskier assets improved.

Earlier, the rand declined to the weakest level against the dollar in more than a week after European Central Bank President Mario Draghi damped speculation that more purchases of euro-area bonds are imminent.

South Africa’s 13.5 percent bonds due 2015 retreated for a fourth day, driving the yield up two basis points, or 0.02 percentage point, to 6.78 percent, the highest on a closing basis since Nov. 30. The yield has climbed eight basis points this week.

--Editors: Peter Branton, Alex Nicholson

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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