The rand rallied to lead emerging market gains as weaker-than-expected Chinese growth data spurred speculation authorities would increase stimulus, boosting demand in the biggest buyer of South African commodity exports.
China’s fourth-quarter gross domestic product growth was the weakest since the 2009 recession, spurring speculation that more stimulus may be needed to revive the world’s second-biggest economy. Emerging-market stocks jumped from the lowest level since 2009 and a gauge of currencies climbed from a record low. South African benchmark bond yields fell by the most in a month.
The South African currency, which has weakened 7.3 percent this year, was oversold and due for a rebound, according to Judy Padayachee, a technical strategist at Barclays Plc’s South African unit. Before today’s rally, the rand’s relative strength index versus the dollar had been below 30 for nine days, suggesting to some traders the decline had gone too far.
“Dollar-rand has traded below 17 for five consecutive days, which is helping the oversold rand conditions to unwind,” Padayachee said. Low trading volumes are exacerbating moves in the currency, she said.
The rand gained 1.3 percent to 16.6484 per dollar by 1 p.m. in Johannesburg after strengthening as much as 1.8 percent. Yields on government rand bonds due Dec. 2026 dropped 11 basis points to 9.73 percent.