Rand Rises to 3-Week High Against Dollar Before Fed Ends Meeting

The rand advanced to a three-week high on speculation Federal Reserve officials meeting today will signal they remain open to a further round of asset purchases to spur growth, fueling demand for riskier assets.

South Africa’s currency gained as much as 0.6 percent to 7.7510 per dollar, the strongest level since April 4. It traded 0.5 percent up at 7.7607 as of 4:06 p.m. in Johannesburg. The yield on the nation’s 6.75 percent bonds due 2021 climbed one basis point, or 0.01 percentage point, to 7.68 percent.

The Dollar Index, which measures the greenback’s performance against a basket of major currencies, dropped as U.S. durable-goods orders fell last month by the most in three years, a sign the world’s largest economy is slowing. The Federal Open Market Committee will publish its forecasts for interest rates, growth and inflation and Chairman Ben S. Bernanke will hold a press conference. A further round of asset purchases would boost demand for higher-yielding assets including South African stocks and bonds.

“Much of the focus will rest with the outcome of the FOMC decision and statement this evening,” George Glynos, an economist at Johannesburg-based ETM Analytics, wrote in e-mailed comments today. “Supportive comments from Fed Chairman Bernanke will go some way to alleviating the pressure on risk assets.”

The rand also strengthened after Apple Inc., Boeing Co. and Electrolux AB posted earnings that beat estimates. An index of global emerging-market stocks climbed for a second day and South Africa’s benchmark stock index advanced.

The yield on South Africa’s $1.5 billion of 4.665 bonds due 2024 dropped 28 basis points to 4.175 percent.

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