Bloomberg News

Rand Gains to Three-Month High as Manufacturing Index Expands

February 02, 2012

Feb. 1 (Bloomberg) -- The rand rose to a three-month high after a measure of manufacturing in Africa’s biggest economy beat analysts’ estimates and debt sales in Germany and Portugal bolstered confidence.

South Africa’s currency gained as much as 1.2 percent to 7.7172 per dollar from yesterday’s New York close, the strongest level since Oct. 31. It traded 0.9 percent higher at 7.7371 as of 4 p.m. in Johannesburg. Against the euro, the rand increased 0.2 percent to 10.1967, the most on a closing basis since September 14.

The country’s purchasing managers’ index rebounded to a seven-month high in January, a sign that the recovery in manufacturing may be strengthening, index compiler Kagiso Tiso Holdings said. Germany received bids for more than its maximum target at a bond sale today, while Portugal’s borrowing costs of three- and six-month bills declined.

“We view the expansion in the PMI as rand-positive,” Tebogo Mosepele, an analyst at Standard Bank Group Ltd., said in e-mailed comments. “The data may encourage rand bulls as it bodes well for South Africa’s growth prospects.”

The seasonally-adjusted index rose to 53.2 from 49.4 in December, Johannesburg-based Kagiso said in an e-mailed statement today. The median estimate of four economists surveyed by Bloomberg was 50.2. A number above 50 indicates an expansion in factory output.

The euro, which buys about 30 percent of South Africa’s exports, strengthened against the dollar for the first time in three days after a purchasing managers’ index rose more than analysts’ estimates in January, signaling Europe’s economy is stabilizing.

Bonds Advance

“Some of the risk and liquidity barometers continue to improve, and as they improve so general levels of risk aversion will subside,” George Glynos, an economist at Johannesburg- based ETM Analytics, wrote in e-mailed comments today. “All of this should lend a bullish tone to the rand.”

South Africa’s 6.75 percent bonds due 2021 advanced for a second day, driving the yield down three basis points, or 0.03 percentage point, to 7.71 percent.

--With assistance from Stephen Gunnion in Johannesburg. Editors: Ash Kumar, Linda Shen

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