South Africa’s Rand Climbs, Paring Weekly Slide, on Fed Easing Speculation

The rand gained, paring its worst weekly decline against the dollar in two months, amid speculation that Federal Reserve will introduce measures to stimulate the U.S. economy.

South Africa’s currency appreciated as much as 1.2 percent to 8.1330 per dollar and traded 0.7 percent stronger at 8.1699 as of 4:32 p.m. in Johannesburg. The rand has retreated 2.9 percent this week, the most since the five days ending Sept. 23 and the second-biggest drop in the period among more than 170 currencies tracked by Bloomberg after New Zealand’s dollar. Against the euro, it was little changed at 11.0809 for a five- day decrease of 1.8 percent.

Fed Bank of New York President William C. Dudley said yesterday there’s more the central bank could do to boost the economy, including bond purchases. Claims for unemployment benefits fell to the lowest in seven months, and housing starts for October were higher than economists’ expectations, reports showed yesterday.

“A combination of positive economic data in the U.S. and monetary policy makers who seem ready to support growth at any cost” supported the rand, John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e-mailed comments.

The rand’s gains may be short-lived, said Michael Keenan, a Johannesburg-based analyst at Standard Bank Group Ltd., Africa’s biggest rand trader. Investors may shun riskier, emerging-market assets on concern Europe’s debt problems will slow global growth, damping demand for South Africa’s commodity exports.

South Africa’s 13.5 percent bonds due 2015 gained, driving the yield three basis point, or 0.03 percentage point, lower to 6.79 percent. The yield has climbed 19 basis points this week.

To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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