Rand Fluctuates Versus Dollar Before Fed Meeting as Yields Fall

The rand swung between gains and losses before U.S. Federal Reserve policy makers end a two-day meeting amid speculation Chairman Ben S. Bernanke will continue stimulus that spurred fund flows into emerging economies.

South Africa’s currency traded 0.1 percent weaker at 9.0386 a dollar at 11:27 a.m. in Johannesburg, after advancing and declining as much as 0.3 percent. Yields on benchmark 10.5 percent bonds due December 2026 dropped three basis points, or 0.03 percentage point, to 7.44 percent.

Bernanke will push on with purchases of $40 billion a month of mortgage bonds and $45 billion a month of Treasuries, according to a Bloomberg survey of 44 economists. The central bank has already scooped up $2.3 trillion of Treasuries and mortgage-related bonds since 2008. Monetary easing boosted demand for South African bonds, with inflows hitting a record 93.5 billion rand ($10.3 billion) in 2012.

“I think everyone is having a look at what will come from the FOMC this afternoon,” William van Rijn, a currency trader at Nedbank Group Ltd. in Johannesburg, said by phone. The rand is likely to trade in a tight range ahead of the policy statement, he said.

Fed policy makers said they may end their $85 billion monthly bond purchases in 2013, with members divided between a mid- or end-of-year finish, according to the record of the Federal Open Market Committee’s Dec. 11-12 gathering.

The rand pared losses after a report showed credit growth accelerated at the highest rate in four years in December, limiting the central bank’s room to cut borrowing costs.

Borrowing by households and companies rose 10.1 percent from 9.6 percent in November, according to the Pretoria-based Reserve Bank. The median estimate of 15 economists surveyed by Bloomberg was 9.7 percent.

“Any strength in the numbers would be interest rate negative and thus rand positive,” Bruce Donald, a Johannesburg- based currency strategist at Standard Bank Group Ltd., said in e-mailed comments ahead of the release.

To contact the reporter 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: Vernon Wessels at vwessels@bloomberg.net

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