Rand Strengthens After China Manufacturing Boosts Hope of Global Recovery
The rand strengthened after faster- than-expected manufacturing growth in China boosted the outlook for the global economy, encouraging purchases of higher-yielding assets. South Africa’s purchasing managers’ index also rose.
The currency appreciated as much as 1.1 percent to 7.0110 per dollar and traded at 7.0476 by 4:19 p.m. in Johannesburg, from a previous close of 7.09. Against the euro, the rand advanced 0.1 percent to 9.2386 for a third day of gains.
China’s Purchasing Managers’ Index grew at a faster pace for a fourth straight month in November, climbing to 55.2 from 54.7 in October, according to a logistics federation report. That was more than the 54.8 median estimate in a Bloomberg survey and followed a report yesterday by the U.S. Conference Board that showed sentiment amongst consumers in the world’s biggest economy rose to a five-month high in November.
“U.S. consumer confidence yesterday was the latest in a string of statistics that suggest that the world’s largest economy is picking up while China’s PMI data this morning shows that the world’s second-largest economy is continuing to expand at a breakneck pace,” John Cairns, head of foreign-exchange research at Rand Merchant Bank in Johannesburg, wrote in a client note today.
South Africa’s purchasing managers’ index climbed above 50 in November, indicating an expansion in manufacturing output and a strengthening in the economy’s recovery, Kagiso Securities Ltd. said. The seasonally adjusted index rose to 52.9 from 49.8 in October, Johannesburg-based Kagiso said in an e-mailed statement today. The index had been below 50, indicating a contraction in factory output, for the past two months.
Government bonds rose for a second day in South Africa, with the benchmark 13.5 percent security due September 2015 adding 30 cents to 124.35 rand. The yield on the security declined 7 basis points, or 0.07 percentage point, to 7.36 percent.
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