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Rand Rallies to More-Than 2 1/2-Year High as U.S. Payrolls Beat Forecasts
South Africa’s rand rallied to a more than 2 1/2 year high after a report showed U.S. companies added more jobs than forecast in August, easing concern the world’s biggest economy was falling back into recession.
The currency appreciated for a third day, gaining as much as 1.1 percent to 7.1538 per dollar, the strongest intraday level since January 2008. The rand traded at 7.1800 by 4:22 p.m. in Johannesburg, from a previous close of 7.2350.
Emerging-market stocks and currencies rallied after a report showed U.S. private payrolls that exclude government agencies climbed 67,000, after a revised 107,000 increase in July that was more than initially estimated, Labor Department figures in Washington showed today. The median estimate of economists surveyed by Bloomberg was for a gain of 40,000.
“The data shows there’s enough job creation in the U.S. to keep the economy from falling into recession,” said Gaelle Blanchard, an emerging-markets strategist at Societe Generale SA in London. “That’s reassuring news to the market given the recent fears of the sustainability of the recovery. It’s been a good week and we’re seeing some strength in risky assets.”
Better-than-estimated payrolls data added to optimism stemming from reports yesterday that showed U.S. pending home and retail sales unexpectedly improved, bolstering the outlook for the economy. U.S. jobless claims fell and the European Central Bank said yesterday growth in the 16-member euro zone would be better than previously estimated.
Improving Data
Improving economic data across the world has reduced fears of a renewed global recession, helping the rand extend its advance this past week to 1.8 percent versus the dollar, the best five-day performance since the five days through July 30. Against the euro, the rand gained 0.2 percent to 9.2442 for a weekly gain of 0.8 percent, the best since the five days ended Aug. 13.
Government bonds drifted between gains and losses in South Africa, and the 13.5 percent security due September 2015 was little changed at 125.831. The yield on the security declined less than 1 basis point to 7.27.
Central Bank Governor Gill Marcus said late yesterday that inflation pressures were “relatively benign” and that the July consumer price growth rate of 3.7 percent was “lower than anticipated,” according to a speech in Johannesburg.
FRAs, or forward-rate agreements, showed traders increased bets the central bank will lower its 6.5 percent benchmark interest rate when it announces its next decision on Sept. 9. The cost of three-month cash contracts due in one month fell two basis points to 6.20 percent, 3 basis points above the record low reached on Aug. 30.
To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net
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