South Africa Bond Yields Fall Most Since July After Rand Gains

South African government bond yields completed the biggest weekly drop since the end of July as the rand strengthened against the dollar.

Yields on government bonds due December 2026 dropped 15 basis points, or 0.15 percentage point, to 7.14 percent by 7 p.m. in Johannesburg, the lowest since Jan. 15. The rand gained as much as 1 percent to 9.0735 per dollar, its best intraday level since March 11. The currency, which reached a four-year low on March 21 of 9.3666, has declined 6.9 percent this year, the worst of 25 emerging markets tracked by Bloomberg.

Foreign investors bought a net 3.43 billion rand ($377 million) of bonds in the three days through yesterday, according to Bloomberg calculations from Johannesburg Stock Exchange data. The Bank of Japan said it will buy more longer-term government bonds as part of its asset-purchase program than expected, while European Central Bank President Mario Draghi said monetary policy will remain accommodative and the Bank of England said it will continue buying assets.

“The bond market had a nice rally over the last week,” Brigid Taylor, head of institutional sales at Nedbank Group Ltd., said by phone. “When the rand was above 9.30 a dollar we saw lots of foreigners coming in buying shares and bonds. That drove the yields lower.”