Rand Strengthens Against Dollar After Foreign Reserves Rise

The rand gained after foreign- reserves data showed the central bank refrained from dollar purchases in January and before the release of a report that may show manufacturing contracted the month before.

South Africa’s currency advanced 0.2 percent to 8.8813 per dollar as of 9:08 a.m. in Johannesburg. Yields on benchmark 10.5 percent bonds due December 2026 were unchanged at 7.34 percent after falling two basis points, or 0.02 percentage point yesterday.

South Africa’s gross foreign-exchange and gold reserves rose 1 percent to $51.2 billion in January as the dollar weakened against currencies including the euro, while the rand fell. The South African Reserve Bank doesn’t target a level for the rand and has said it won’t intervene to strengthen or weaken the currency.

“Results reflected no material foreign-exchange purchases by the central bank over the month,” Bruce Donald, a currency strategist at Standard Bank Group Ltd. in Johannesburg, wrote in e-mailed comments. “The Reserve Bank is currently held back from accumulating foreign exchange reserves not only by the weakness of the currency, but also by the sterilization costs attached to such activity.”

Manufacturing growth slowed to an annual 2.6 percent in December, from 3.4 percent the month before, a report today will show, according to the median estimate of 12 economists in a Bloomberg survey. The report is due at 1 p.m. in Pretoria.

“Any weakness reflected in the number should be read as interest-rate positive, and could then be interpreted as currency negative,” Donald wrote.

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

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

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