Rand Leads Major-Currency Gains as Yields Rise to One-Month High

The rand led major-currency gains against the dollar and bond yields rose to the highest in more than a month after a gauge of manufacturing rose to a two-year high, adding to signs of a revival in Africa’s biggest economy.

South Africa’s currency climbed 0.5 percent to 7.4665 per dollar as of 12:30 p.m. in Johannesburg, the biggest gain out of 16 most-traded currencies monitored by Bloomberg. The yield on nation’s 77 billion rand ($7.5 billion) of 6.75 percent bonds due 2021 rose five basis points, or 0.05 percentage point, to 7.89 percent, the highest since Jan. 23.

South Africa’s purchasing managers’ index rose to 57.9 in February, from 53.2 the month before, beating the 52.3 media estimate of economists in a Bloomberg survey. Manufacturing, which accounts for 15 percent of the nation’s gross domestic product, expanded in the last three months of 2011 after contracting in the second and third quarters, lifting economic growth from close to a two-year low.

“It was a lot better than expected, and that is quite positive” for the rand, Ian Cruickshanks, head of treasury strategic research at Johannesburg-based Nedbank Group Ltd., said by phone. “Risk appetite is still there, and that is going to continue to buoy emerging-market currencies.”

China’s manufacturing improved for a third month in February and data later today may show U.S. factory activity climbed to an eight-month high, brightening the outlook for global growth. Federal Reserve Chairman Ben S. Bernanke said the drop in unemployment has been more rapid than expected. China and the U.S. buy 19 percent of South Africa’s exports, according to government data for 2011.

‘Rand Resilience’

“The outlook for the U.S. economy continues to improve,” George Glynos, an economist at Johannesburg-based ETM Analytics, wrote in e-mailed comments today. “Rand resilience may be a feature for a while to come.”

The Institute for Supply Management’s factory index probably rose to 54.5 in February from 54.1 in January, according to the median estimate of economists surveyed by Bloomberg News before the data today. Readings above 50 signal growth. A separate report today may show consumer purchases in the world’s largest economy increased 0.4 percent in January.

China’s purchasing managers’ index increased to 51.0 last month from 50.5 in January, the nation’s statistics bureau and logistics federation said in a statement today. China is South Africa’s biggest export destination.

South Africa’s $1.5 billion of 4.665 percent bonds due 2024 gained, driving the yield down 1.3 basis points to 4.18 percent, the lowest since the bonds were first sold on Jan. 17. The premium investors demand to hold the debt rather than U.S. Treasuries narrowed three basis points to 219 basis points, the lowest on record.

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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