Rand Advances to Month-High as Manufacturing Rebound Buoys Equities

The rand advanced to its strongest level against the dollar in almost a month as signs of improving manufacturing output around the world boosted commodities and equities.

South Africa’s currency, the worst performer last year among 12 major currencies on Bloomberg, appreciated as much as 0.5 percent and traded 0.4 percent higher at 8.0412 as of 1:40 p.m. in Johannesburg, its strongest level since Dec. 7. The rand retreated 18 percent in 2011, its first annual decline since depreciating 27 percent in 2008.

The Standard & Poor’s GSCI index (GSCI) of raw materials advanced to a one-month high as the prices of metals including copper, platinum and gold rose. South Africa’s benchmark stock index (JALSH) advanced the most in more than a month, led by raw materials producers including Anglo American Plc and BHP Billiton Ltd.

“The rand’s strength has largely got to do with slightly more buoyant equity markets,” David Gracey, who heads currency and derivatives trading at Investec Bank Ltd., said by phone.

Australian manufacturing expanded for the first time in six months, an industry survey today showed, adding to evidence the global economy is strengthening after German and Chinese factory output reports beat economist estimates in the past two days. Data later today may show a U.S. manufacturing gauge climbed to a six-month high in December, according to a survey of economist forecasts compiled by Bloomberg.

The MSCI Emerging Markets Index (MXEF) rose as much as 1.8 percent, set for the highest close since Dec. 26 and the biggest gain in two weeks.

Amid signs of recovering global growth, “the potential for a rand recovery should not be underestimated and the local unit has started the year in this more bullish tone,” George Glynos, an economist at Johannesburg-based ETM Analytics, wrote in e- mailed comments today.

South Africa’s 6.75 percent bonds due 2021 gained, driving the yield down three basis points, or 0.03 percent, to 7.94 percent, the lowest since Dec. 9.

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