Aug. 28 (Bloomberg) -- South Africa's rand rose for a second day against the dollar as the country's stocks rose with the prices of gold and platinum, the nation's largest exports.

The rand climbed the most in five days as a weaker dollar boosted demand for the precious metals as alternative investments and hedges against inflation. South Africa produces almost 80 percent of the world's platinum and about 10 percent of its gold, typically causing the rand to move in tandem with metals' prices.

``The dollar has lost momentum and that's helping precious metals, which are priced in the U.S. currency,'' said Lucy Bethell, an emerging-market currency strategist in London at Royal Bank of Scotland Plc. ``That gives a better tone to South African resource stocks, which can help buoy the currency.''

The rand gained as much as 1 percent to 7.6720 per dollar and was at 7.7031 by 5:19 p.m. in Johannesburg, from 7.7500 yesterday. It climbed versus all but one of the 16 most-actively traded currencies monitored by Bloomberg, adding 0.4 percent against the euro to 11.3655.

Gold advanced for a third day, gaining as much as 2.4 percent to $844.24 an ounce, while platinum added 2.8 percent to $1,478.05 an ounce.

``When the dollar falls, commodity prices rise on the back of that,'' said Jacques Simpson, an analyst in Cape Town at Metropolitan Asset Managers Ltd. ``Higher commodity prices boost earnings for South African mining companies. That boosts demand for local stocks, which can translate into rand strength.''

South Africa's FTSE/JSE Africa All Share Index climbed 1.9 percent, the most in six days, led by mining companies including BHP Billiton Plc and Anglo Platinum Ltd.

The rand gained even as government data showed producer- price inflation quickened at the fastest pace in 22 years last month, buoyed by surging fuel and electricity prices. The cost of goods leaving the country's factories and mines quickened to 18.9 percent from 16.8 percent in June, Statistics South Africa said today.

Price Pressures

Consumer inflation quickened to 13 percent in July, from 11.6 percent the previous month, a separate report showed yesterday. It was the 15th consecutive month it exceeded the central bank's 3 percent to 6 percent target.

``The market hasn't really reacted negatively to the inflation data because the consensus view is that it has peaked,'' said Bethell. ``Attention has shifted to the timing of rate cuts.''

Government bonds fell, with the yield on the 13 percent note due August 2010, which is more sensitive to interest-rate expectations, climbing 4 basis point to 9.75 percent. The yield on the benchmark 13.5 percent security, due September 2015, added 1 basis point to 9.13 percent. Yields move inversely to bond prices.

South Africa's unemployment rate fell to 23.1 percent in the second quarter from 23.5 percent in the first three months of the year, Pretoria-based Statistics South Africa said today. The number of people without work in Africa's biggest economy declined to 4.11 million from 4.19 million. South Africa's unemployment rate is the highest of 61 countries tracked by Bloomberg.

To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net; Garth Theunissen in Johannesburg gtheunissen@bloomberg.net

Last Updated: August 28, 2008 11:28 EDT