The rand gained for the first time in three days, paring its worst weekly decline since October, on optimism global central banks will extend measures to stimulate growth, supporting demand for riskier assets.
South Africa’s currency strengthened 0.4 percent to 9.1529 per dollar by 9:18 a.m. in Johannesburg, crimping its decline this week to 2.4 percent, the most since the five days ending Oct. 5. Yields on benchmark 10.5 percent bonds due December 2026 rose three basis points, or 0.03 percentage point, to 6.93 percent. The yield is down 11 basis points this week.
Finance ministers and central bank chiefs are gathered in Washington to discuss policies to support economic growth. Tumbling commodity prices are reducing pressure on inflation, giving central banks more room to manoeuvre. South Africa’s consumer price index rose 5.9 percent in March, less than the 6 percent median estimate of 20 economists in a Bloomberg survey, and within the central bank’s target of 3 percent to 6 percent.
“With central banks committed to reflating their respective economies, the news of moderating inflation abroad means that the central banks will now have more room to keep monetary policy at extremely accommodative levels or even loosen further,” Quinten Bertenshaw, a Johannesburg-based analyst at ETM Analytics, said in e-mailed comments. “Inflows into bonds have improved recently and remain strong for the month of April.”
Foreign investors were net purchasers of 561 million rand ($62 million) of South African bonds yesterday, bringing net purchases for the year to 26.4 billion, according to JSE Ltd. data. Offshore investors have bought a net 12.3 billion rand of the nation’s debt this month, compared with 6.4 billion rand in the corresponding period last year.
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