The rand appreciated for a third day after a strike at South Africa’s second-biggest coal miner ended and Cyprus reached an accord on an international bailout, spurring demand for riskier assets.
The currency gained as much as 0.8 percent to 9.2260 per dollar, and traded 0.1 percent stronger at 9.2935 by 3:50 p.m. in Johannesburg. The rand depreciated 1.3 percent last week, its fifth straight five-day fall. Yields on benchmark 6.75 percent bonds due March 2021 dropped two basis points, or 0.02 percentage point, to 6.58 percent.
Employees at Exxaro Resources Ltd. agreed to return to work today after a two-week strike that threatened coal supplies to Eskom Holdings SOC Ltd., the state-owned electricity company, and a repeat of January 2008 blackouts that paralyzed mines and factories. Cyprus agreed to the outlines of an aid package, paving the way for 10 billion euros ($13 billion) of emergency loans to stave off the threat of default.
“The Cyprus bailout and the reduced threat of electricity shortages should result in the rand rallying today,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e-mailed comments. “We’re also seeing risk-on in global markets, with equities and other risk currencies rallying.”
Emerging-market stocks advanced the most in two weeks and the Standard & Poor’s GSCI Index gained for a second day. Metals and other mining commodities accounted for 53 percent of South Africa’s exports in 2012, according to government data.
The rand fell to 9.3666 per dollar on March 21, the weakest level since April 2009, as concern rose about potential electricity blackouts and as Cyprus struggled to secure the bailout.
Technical indicators suggest the currency may extend its recovery after moving to below 9.32 per dollar, seen as a significant resistance level to further gains, Brigid Taylor, head of institutional flow sales at Nedbank Group Ltd. in Johannesburg, said in an e-mail.
The rand recovered before data this week that may show private-sector credit growth slowing, the producer inflation rate falling and the monthly trade deficit narrowing.
Growth in credit extension to the private sector slowed to 8 percent in February, from 8.6 percent the month before, the Reserve Bank will report on March 28, according to the median estimate of economists in a Bloomberg survey. Factory-gate inflation slowed to 5.6 percent from 5.8 percent, while the nation’s trade deficit contracted to 12.7 billion rand ($1.4 billion) from a record 24.5 billion rand, separate reports may show.
“There is considerable two-way risk in the currency market this week,” Bruce Donald, a strategist at Standard Bank Group Ltd. in Johannesburg, said in a note e-mailed to clients today. Trade data “is very lumpy and erratic, which means that the risk attached to the outcome relative to the consensus score is considerable in both directions,” he said.