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South African Reserves Surge With Proceeds From Dollar Bond

South African gold and foreign-currency reserves rose the most in almost two years in January after the government sold bonds abroad.

Gross reserves gained 5.3 percent to $51.5 billion from the previous month, the Pretoria-based Reserve Bank said on its website today. Net reserves increased to $49 billion from $47.9 billion in December.

South Africa sold $1.5 billion of 12-year bonds on Jan. 9 to repay maturing debt and for general purposes, according to a statement filed with the U.S. Securities and Exchange Commission. That’s helping to bolster reserves, underpinning the rand’s strength after the currency gained 6.5 percent against the dollar this year.

“The improvement in South Africa’s reserves should be of benefit to the currency over the longer term as a stronger reserves position should help to reduce the currency’s volatility,” Nomvuyo Guma, a currency strategist at Standard Bank Group Ltd. in Johannesburg, said in a e-mailed note to clients today.

The rand was at 7.5776 against the dollar as of 8:48 a.m. in Johannesburg from 7.5688 before the data was released.

Reserves were also boosted last month by a weaker dollar and higher gold price, the central bank said. The dollar dropped against all 16 major currencies tracked by Bloomberg last month, driving the value of the bank’s holdings of euro, yen and other foreign currencies higher.

Gold reserves, which account for about 14 percent of gross holdings at the central bank, rose $719 million to $6.991 billion, the bank said. The price of gold climbed 11 percent to as high as $1,739.07 an ounce.

The median forecast in a Bloomberg survey of four analysts was for gross reserves to increase to $49.94 billion.

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