Rand Pares Biggest Rally on Emerging-Market Selloff

The rand pared the world’s biggest currency rally against the dollar yesterday as investors sold emerging-market currencies, and ahead of U.S. consumer sentiment data.

The rand gained 2.6 percent yesterday, making it the best performer among all those tracked by Bloomberg. The Thomson Reuters/University of Michigan index of consumer sentiment was unchanged at its highest level since July 2007 of 84.5 this month, according to the median estimate of 70 economists surveyed by Bloomberg.

“Generally, you saw a bit of profit-taking on risk currencies and global equities overnight,” John Cairns, a currency strategist at FirstRand Ltd. (FSR)’s Rand Merchant Bank, said by phone from Johannesburg. “The rand pulled back a little bit with that. Overall, the rand is still looking quite strong this morning.”

The rand, the worst performer this year against the dollar of 24 major merging-market currencies tracked by Bloomberg, was 0.3 percent weaker at 9.8743 per dollar by 11:15 a.m. in Johannesburg. Yields on 10.5 percent rand-denominated government debt due December 2026 fell 14 basis points to 7.76 percent, the lowest in more than a week on a closing basis.

Sales at U.S. retailers rose more than forecast in May and firings declined last week, data from the Commerce Department and Labor Department showed yesterday. The consumer sentiment data could have an impact on the rand today, Cairns said.

Emerging-market assets were sold off since the Fed said it could start to taper down asset purchases as the U.S. economy grow faster.

The Mexican peso lost 0.1 percent to 12.6395 per dollar after gaining 2.4 percent yesterday. The Polish zloty weakened 0.2 percent to 3.1663 per dollar after strengthening 1.1 percent yesterday.

To contact the reporter on this story: Jaco Visser in Johannesburg at avisser3@bloomberg.net

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

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