Rand Gains as Coal Strike Ends and Cyprus Agrees to Bank Bailout
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, sparking demand for riskier assets.
The currency gained as much as 0.5 percent to 9.2572 per dollar, and traded 0.2 percent stronger at 9.2780 by 9:05 a.m. in Johannesburg. The rand weakened 1.3 percent last week, its fifth straight five-day fall. Yields on benchmark 10.5 percent bonds due December 2026 were unchanged at 7.48 percent.
Employees at Exxaro Resources Ltd. (EXX) 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 paralysed 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 as prices of metals including copper and platinum rose. Metals and other mining commodities accounted for 53 percent of South Africa’s exports in 2012, according to government data.
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