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Rand Gains First Day in Four as Euro Jumps on Rescue Fund Size

The rand advanced for the first time in four days, capping its best first quarter since 2004, as the euro rose after European finance ministers agreed to expand rescue funds and U.S. personal spending grew more than forecast.

South Africa’s currency gained as much as 0.9 percent and traded 0.5 percent stronger at 7.6817 per dollar as of 4 p.m. in Johannesburg, making it today’s third-best performing emerging-market currency monitored by Bloomberg. The euro gained as much as 0.6 percent versus the dollar to 1.3377. The yield on South Africa’s 13.5 percent bonds due 2015 declined 11 basis points to 6.688 percent.

European governments capped fresh rescue lending at 500 billion euros ($666 billion), bringing the overall size of the firewall to 800 billion euros, according to a statement after a meeting in Copenhagen today. Efforts to raise the firewall will succeed in tempering the debt crisis, German Finance Minister Wolfgang Schaeuble said yesterday. U.S. consumer purchases rose the most in seven months, according to Commerce Department data.

“Whatever happens out of a combination of the euro zone and the U.S. today will in the main govern what is likely to unfold heading into the weekend.” George Glynos, an economist at Johannesburg-based ETM Analytics, wrote in e-mailed comments.

The rand often moves in tandem with the euro against the dollar, with a statistical correlation of 0.59 over the past year. A value of 1 would mean they moved in lockstep.

The euro area accounts for 22 percent of South Africa’s exports.

Credit Growth

Earlier, data showed South African credit growth unexpectedly accelerated in February as the recovery in Africa’s largest economy strengthened.

Borrowing by households and businesses rose 7.9 percent from 7.3 percent in January, the Pretoria-based Reserve Bank said on its website today. The median estimate in a Bloomberg survey of 15 economists was for credit to expand 7 percent.

South Africa’s Reserve Bank held its benchmark lending rate at 5.5 percent for a record 16 months yesterday to support the economy as inflation slows.

The rand has advanced 5.3 percent this year. It declined 18 percent last year, the second-worst performance by an emerging-market currency after Turkey’s lira.

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