Rand Gains for Second Day as China Economy Meets Estimates
The rand gained for a second day after China, the largest buyer of South African raw materials, posted economic growth that was in line with estimates.
The Chinese economy grew by 7.5 percent in the three months through June, compared with 7.7 percent the previous quarter and meeting the median estimate of 74 economists surveyed by Bloomberg. South Africa, which has the world’s largest known reserves of platinum and chrome, relies on metals for more than 50 percent of its export earnings.
“The market is relieved that this morning’s figure wasn’t worse,” John Cairns, a currency strategist at FirstRand Ltd. (FSR)’s Rand Merchant Bank unit, said in an e-mailed note to clients.
The rand strengthened 0.4 percent to 9.9460 per dollar by 9:33 a.m. in Johannesburg. The currency is the worst performer this year among 24 major emerging-market peers tracked by Bloomberg, with a drop of 15 percent in the period. Yields on 10.5 percent government debt due December 2026 declined 2 basis points to 7.99 percent.
Foreign investors bought a net 531 million rand ($53 million) of South African bonds last week, bringing the total to 19.8 billion rand this year, compared with 93.5 billion rand a year earlier.
The spot price of gold rose 0.1 percent to $1,286.55 per ounce. South Africa is the world’s fifth-largest producer of the metal. Platinum gained for a sixth day in the longest winning streak since January, advancing 0.3 percent to $1,412.77 per ounce.
China’s “slowdown is a major worry for commodities and therefore for South Africa and the rand,” Rand Merchant Bank’s Cairns said.
To contact the reporter on this story: Jaco Visser in Johannesburg at firstname.lastname@example.org