Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Rand Climbs to 12-Week High as Stress Tests Boost Risk Appetite

July 26 (Bloomberg) -- South Africa’s rand rallied to its strongest level in 12 weeks against the dollar after most European banks passed stress tests, boosting confidence in the global economic outlook and investor appetite for risk.

The rand appreciated as much as 1 percent to 7.3610 per dollar, its strongest intraday price since May 4, before trading 0.8 percent stronger at 7.3763 as of 4:41 p.m. in Johannesburg, from a close of 7.4345 on July 23. Against the euro, the rand gained 0.6 percent to 9.5404.

European regulators found that seven of the 91 banks subject to evaluations need to raise a combined 3.5 billion euros ($4.5 billion) of capital, lenders and regulators said after the close of European trading on July 23. Before the results were published, Goldman Sachs Group Inc. estimated that lenders would need to raise 38 billion euros and Barclays Capital said they would require as much as 85 billion euros.

“The stress tests were better than expected and while the news is still being digested, there has been a shift in sentiment with relief,” said Brigid Taylor, a senior currency trader at Rand Merchant Bank in Johannesburg. “This bodes well for riskier currencies such as the rand.” Taylor sees the rand trading between 7.36 and 7.45 against the dollar today, and between 7.32 and 7.48 during the week.

Money-market futures dropped for the first time in three days as investors increased bets the central bank will cut rates when it announces its decision on Sept. 9. Forward-rate agreements showed that contracts for three-month cash due in three months fell 0.5 basis point to 6.32 percent.

Government bonds rose, with the price of the 13.5 percent security due September 2015 gaining 63 cents to 124.46 rand, lowering the yield by 13 basis points to 7.63 percent.

To contact the reporter on this story: Janice Kew in Johannesburg at jkew1@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.