Bloomberg News

Rand Gains 2nd Day as Yields Rise After Growth Beats Estimates

May 29, 2012

The rand advanced against the dollar for a second day after South Africa’s economy grew more than forecast and commodity prices rose, boosting demand for shares in mining companies. Bonds fell.

South Africa’s currency appreciated 0.4 percent to 8.3143 per dollar as of 3:25 p.m. in Johannesburg. Yields on the nation’s 6.75 percent bonds due 2021 climbed one basis point, or 0.01 percentage point, to 7.70 percent.

Gross domestic product expanded an annualized 2.7 percent in the first quarter, down from 3.2 percent in the previous three months, Pretoria-based Statistics South Africa said on its website today. Growth was forecast at 2.3 percent, according to the median of 16 estimates in a Bloomberg survey of economists. The nation’s benchmark stock index climbed to the highest in a week as shares in commodity exporters including Anglo American Plc and BHP Billiton Ltd. advanced.

“South Africa has now experienced 11 consecutive quarters of positive growth, following the recession,” Kevin Lings, an economist at Stanlib Asset Management Ltd. in Johannesburg, said in e-mailed comments. “The growth rate and recovery over the past 11 quarters has actually been fairly reasonable.”

Standard & Poor’s GSCI Index of raw materials gained for a third day as the prices of metals including copper and nickel rose after China’s finance ministry said it will subsidize the use of energy-saving products, a further step in the government’s efforts to increase consumer demand and stimulate the slowing economy. A report today showed U.S. home values in 20 U.S. cities fell in the 12 months ended March at the slowest pace in more than a year.

South Africa Exports

Metals and other commodities account for 45 percent of South Africa’s exports, according to government data for 2011.

Slower growth in Europe, where a debt crisis that began more than two years ago may lead to Greece leaving the monetary union, is curbing demand from a region that buys about a fifth of South African manufactured exports. Finance Minister Pravin Gordhan in February cut his growth forecast this year to 2.7 percent from an earlier estimate of 3.4 percent.

“Risk appetite is being supported by growing optimism that China will take steps to boost growth in its economy,” Nomvuyo Guma, a currency strategist at Standard Bank Group Ltd. in Johannesburg, said in e-mailed comments.

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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