Rand Strengthens as German Confidence, Spanish Debt Sale Encourage Markets

The rand strengthened as German investor confidence unexpectedly increased and Spain sold more debt than planned at an auction, boosting equity markets and commodities.

South Africa’s currency appreciated as much as 0.5 percent to 8.2235 per dollar, reversing an earlier decline of 0.4 percent. It traded at 8.2366 as of 4:36 p.m. in Johannesburg.

The ZEW Center for European Economic Research in Mannheim, Germany, said its index of investor and analyst expectations increased to minus 53.8 in December from a three-year low of minus 55.2 the previous month. Economists forecast a drop to minus 55.8. Spain sold 4.94 billion euros ($6.5 billion) of bills, more than the maximum target of 4.25 billion euros. Countries in the European Union consume about a third of South African manufactured goods.

“There’s been some recovery in stock markets, if you look at the DAX and the FTSE,” Ion de Vleeschauwer, chief dealer at Bidvest Bank Ltd. in Johannesburg, which runs South Africa’s largest chain of moneychangers, said by phone. “Although not massive gains, we did see a bit of improvement in sentiment. It’s a bit of a relief rally really.”

Germany’s DAX Index (DAX) rose 0.6 percent, while the FTSE 100 (UKX) Index in London climbed 1 percent. Standard and Poor’s GSCI Index of commodities gained 0.6 percent. Commodities make up more than half of South Africa’s total exports, according to Rand Merchant Bank.

South Africa’s 13.5 percent bonds due 2015 declined for a seventh day, driving the yield up four basis points, or 0.043 percentage points, to 6.898 percent, the highest on a closing basis since Nov. 29. The yield climbed seven basis points yesterday.

To contact the reporter on this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net

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

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