The rand gained, paring a second weekly drop that was stoked by South African strikes, as nations from Brazil to India signaled support for financial markets. Bond yields fell the most in almost six weeks.
The MSCI Emerging Markets stock index climbed 1 percent to trim the biggest weekly drop in two months as speculation grew that the Federal Reserve will cut stimulus next month. Brazil’s central bank said it will offer $3 billion in swap and credit line auctions per week to shore up the real and the Reserve Bank of India said the nation’s economic and monetary policies must focus on preserving financial stability.
“Emerging-market currencies have managed to claw back some losses,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e-mailed comments. The “rebound has been assisted by some aggressive central bank action.”
The rand advanced 1 percent to 10.1751 per dollar as of 4:44 p.m. in Johannesburg, paring its depreciation this week to 0.8 percent. Yields on benchmark 10.5 percent bonds due December 2026 dropped 15 basis points, or 0.15 percentage point, to 8.1 percent, retreating from the highest close since January 2012. The notes yielded 6.4 percent a week ago.
Wage disputes in South Africa’s gold and platinum mining industries and a strike that shut factories at carmakers including General Motors Co. have weighed on the rand this week, Mohammed Nalla, head of strategic research at Nedbank Group Ltd., said in an e-mail.
Two labor unions representing gold mining workers said yesterday their members may vote to strike after wage talks with producers such as AngloGold Ashanti Ltd. stalled. A walkout by about 90,000 construction workers starting Aug. 26 is set to affect building at two Eskom Holdings SOC Ltd. power projects.
South Africa has been wracked by labor turmoil since last year, disrupting production at gold and platinum mines and undermining growth in Africa’s biggest economy. The country’s labor environment is deteriorating, Trade Minister Rob Davies said in Cape Town yesterday after a cabinet meeting.