The rand advanced, heading for its best start to a year since 2006, as stocks and commodities climbed after most countries in Europe agreed to tighter budget controls and Greece made progress on debt talks.
South Africa’s currency appreciated 0.8 percent to 7.7760 per dollar as of 3.43 p.m. in Johannesburg. It has gained 4 percent in January, the most in a month since December 2010. The rand last started the year on a winning note in January 2006.
Standard & Poor’s GSCI Index of 24 raw materials gained and a measure of emerging-market stocks advanced after European Union leaders, meeting in Brussels yesterday, completed a fiscal-discipline treaty that speeds sanctions on high-deficit states. Greek Prime Minister Lucas Papademos said he’s “strongly committed” to reaching a debt-swap pact with bondholders. The euro, the currency of 30 percent of South Africa’s trade, snapped its biggest decline in two weeks.
“The market believes that some rescue package will be put together and that it will be successful,” Ian Cruickshanks, head of treasury strategic research at Johannesburg-based Nedbank Group Ltd., said by phone. “A bit of confidence is coming back into the euro, and in the rand as well because of the trade relationship. Equities are also up, and that is always a sign that risk appetite is returning.”
South Africa’s benchmark stock index advanced for the first time in three days, led by miners including BHP Billiton Ltd. and Anglo American Plc. Raw materials account for as much as 60 percent of South Africa’s exports.
The rand stayed stronger after a report showed borrowing by households and business rose more than economists forecast in December. South Africa had a trade surplus of 4.7 billion rand ($605 million) last month, compared with a deficit of 8 billion rand the month before, a separate report showed. The median forecast of 12 economists in a Bloomberg survey was a deficit of 1.6 billion rand.
“The unexpected surplus bodes well for the rand on two fronts,” Nomvuyo Guma, a currency strategist at Standard Bank Group Ltd. in Johannesburg, said in e-mailed comments. “Firstly, the data is positive from a gross domestic product differential perspective as it implies lower import volumes and relatively robust exports. Secondly, the lower trade deficit would have contributed positively to a narrowing in the current account.”
South Africa’s 6.75 percent bonds due 2021 gained, driving the yield down two basis points, or 0.02 percentage point, to 7.73 percent.
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