The rand gained for the first time in four days, rebounding from a four-year low against the dollar, after manufacturing growth beat analysts’ estimates and mining output unexpectedly increased.
South Africa’s currency strengthened as much as 0.5 percent, and traded 0.2 percent up at 9.2438 per dollar by 3:24 p.m. in Johannesburg. Yields on benchmark 10.5 percent bonds due December 2026 dropped one basis point, or 0.01 percentage point, to 7.45 percent.
Manufacturing growth accelerated to 3.9 percent in the year through January, from 2 percent in December, a report showed today. The median estimate of 11 economists in a Bloomberg survey was for growth of 2.7 percent. Mining production rose 7.3 percent, the first increase since August, a separate report showed. The data raised speculation that the nation’s current-account deficit will narrow as exports pick up.
“The rand is essentially the mechanism for the current account to correct itself,” Jonathan Meyerson, head of fixed-income investments at Cadiz Asset Management in Cape Town, said by phone. “With the weaker currency, we should see some kind of recovery.”
The Reserve Bank has kept its benchmark interest rate unchanged at 5 percent, the lowest in more than 30 years, since July to help support growth in Africa’s biggest economy. Gross domestic product will expand 2.7 percent this year, less than the 3 percent estimated in October, Finance Minister Pravin Gordhan said in his budget speech in Cape Town in February.
The rand slumped 1.9 percent in the first three days of this week to the weakest level since April 2009 as the current-account shortfall remained near a four-year high and retail sales slowed in January, adding to signs Africa’s largest economy is stalling. The depreciation may have been too steep, a technical indicator signaled today.
“The reality is that the trend in the rand cannot continue in this one direction unabated,” Quinten Bertenshaw, a Johannesburg-based analyst at ETM Analytics, said in e-mailed comments. “At some point, the weakness of the rand will be self-correcting.”
The stochastic oscillator for the rand versus the dollar was at 14.9 today, below the 30 threshold that signals the currency may have depreciated too quickly and is poised for a rebound. The measure, which tracks the price of a currency relative to its highs and lows during a particular period, has been below 30 for the past six days.