The rand strengthened, set for a second weekly advance, and bonds gained after Federal Reserve Chairman Ben S. Bernanke quelled concern that a reduction of U.S. stimulus was imminent.
Bernanke said yesterday it was “way too early to make any judgment” about starting tapering in September. On July 17, he said the central bank’s quantitative easing is “by no means on a preset course.” Bond purchases by the Fed and other developed-nation central banks helped boost demand for high-yielding assets including South African stocks and bonds, supporting the rand.
“Quantitative easing in some form or another is going to be with us at least for the rest of the year,” Mohammed Nalla, head of strategic research at Nedbank Group Ltd. (NED) in Johannesburg, said by phone. “The market is paring back its expectations” of a reduction in Fed asset purchases. he said.
The rand appreciated 0.3 percent to 9.9063 per dollar as of 10:31 a.m. in Johannesburg, bringing its advance this week to 0.8 percent. Yields on benchmark 10.5 percent bonds due December 2026 fell eight basis points, or 0.08 percentage point, to 7.90 percent for a decline of 11 basis points in the last five days.
South Africa’s central bank left its repurchase rate at 5 percent for a sixth meeting yesterday to help stimulate growth in the continent’s biggest economy, which has been buffeted by slowing demand for the nation’s exports. The bank won’t automatically raise rates if inflation quickens, Governor Gill Marcus said. Central banks in Brazil and India have raised rates in recent weeks after their currencies weakened.
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