The rand advanced to its strongest level in a month after manufacturing output in Africa’s biggest economy beat analysts’ expectations in July amid signs of a recovery in global growth. Bonds gained.
Factory output rose 5.4 percent from a revised 0.5 percent a month earlier, Statistics South Africa said today. The median estimate in a Bloomberg survey of 12 economists was 1.6 percent. U.K. unemployment unexpectedly fell in the second quarter, while industrial production and retail sales in China gained, reports showed yesterday.
“Global growth continues to show signs of strengthening,” Annabel Bishop, a Johannesburg-based economist at Investec Ltd., said in an e-mail. “The improved global demand will accelerate demand for South African exports. The rebound in July’s growth in manufacturing production reaffirms this view.”
The rand appreciated as much as 0.9 percent to 9.9172 per dollar, the strongest level since Aug. 15 on an intraday basis. It traded 0.5 percent higher at 9.9373 as of 3:53 p.m. in Johannesburg. Yields on benchmark 10.5 percent bonds due December 2026 dropped nine basis points, or 0.09 percentage point, to 8.24 percent, the lowest on a closing basis since Aug. 12.
China is the biggest buyer of raw materials from South Africa, which is the world’s largest producer of platinum and No. 6 gold miner. Prices for bullion rose as much as 0.4 percent, while platinum added 1 percent. The U.K. is the largest provider of foreign capital such as equity, debt and direct investments into South Africa, according to the central bank.
Earlier, the rand gained after the U.S. delayed a decision on military strikes against Syria. After saying 10 days ago he would ask Congress to authorize using military force, President Barack Obama reversed course yesterday and said he would pursue a proposal by Russia to have Syria surrender its stockpiles of chemical arms to international authorities.
“Syria remains the headline issue as the possibility grows that the U.S. might not take military action,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e-mailed comments. “This creates some possibility that risky currencies could receive support.”
Foreign investors bought a net 1.87 billion rand ($188 million) of South African bonds and 940 million rand of stocks yesterday, according to JSE Ltd. data.