The rand gained for a third day and bond yields fell to the lowest in almost a month as speculation European leaders are preparing for more monetary easing boosted demand for South Africa’s assets.
The currency climbed as much as 0.6 percent to 8.3366 per dollar, the strongest level since Aug. 24. It traded 0.2 percent higher at 8.3690 per dollar as of 3:54 p.m. in Johannesburg. Yields on benchmark 6.75 percent bonds due 2021 dropped for a second day, falling five basis points, or 0.05 percentage point, to 6.64 percent, the lowest on a closing basis since Aug. 6.
European leaders are stepping up efforts to address the region’s debt crisis this week as they await a policy meeting of the region’s central bank on Sept. 6. European Central Bank President Mario Draghi is due to distribute his bond-purchasing plan to national banks after he was said to tell officials yesterday he would be comfortable buying three-year government bonds to bring down borrowing costs. Foreign investors bought a net 1.15 billion rand ($137 million) of South African bonds yesterday, according to JSE Ltd. data.
“Risk currencies are holding up nicely,” John Cairns and Josina Solomons, currency strategists at Rand Merchant Bank in Johannesburg, said in e-mailed comments. Draghi’s remarks boosted hopes of further monetary easing by the ECB, they added.
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