The rand advanced for a third day and bonds gained as policy makers in leading economies said they will collaborate to respond to Europe’s crisis, boosting investor appetite for riskier, emerging-market assets.
South Africa’s currency advanced as much as 0.9 percent and traded 0.3 percent stronger at 8.3984 per dollar at 3:20 p.m. in Johannesburg, the highest since May 29 on a closing basis. Yields on the nation’s 6.75 percent bonds due 2021 dropped seven basis points, or 0.07 percentage point, to 7.68 percent.
European Central Bank President Mario Draghi said officials stand ready to act as the euro region’s growth outlook worsens. Group-of-Seven officials will work together to help Spain and Greece place public finances on a sustainable footing, Japanese Finance Minister Jun Azumi told reporters yesterday after a conference call between finance ministers and central bank governors of the G-7.
“Speculation is mounting that the recent downturn in economic indicators could spur further monetary easing from some of the world’s key central banks,” Nomvuyo Guma, a currency strategist at Standard Bank Group Ltd. in Johannesburg, said in e-mailed comments. “The turn in sentiment has filtered into the rand.”
Atlanta Federal Reserve President Dennis Lockhart said that extending the central bank’s Operation Twist stimulus program is an “option on the table.”
Emerging-market stocks advanced, driving a benchmark index to a second day of gains, and Standard & Poor’s GSCI Index climbed to the highest in a week. South Africa’s benchmark stock index climbed for a second day as commodity exporters including Anglo American Plc and BHP Billiton Ltd. rallied.
The rand pared its advance after the ECB today left its benchmark interest rate at 1 percent and Draghi said that the euro-region economy faces “increased downside risks.”
“It just doesn’t seem that they’re getting anywhere,” Ian Cruickshanks, head of treasury strategic research at Johannesburg-based Nedbank Group Ltd., said by phone. “It’s all pretty inconclusive. Not much was expected, and that was about right.”
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