Rand Gains 1st Day in Three, Paring Weekly Drop on Commodities

The rand gained for the first time in three days, paring its decline this week, after Chinese trade figures exceeded estimates, adding to evidence of a growth rebound in the biggest buyer of South African raw materials.

South Africa’s currency advanced 0.3 percent to 8.8797 per dollar as of 5:01 p.m. in Johannesburg, cutting its retreat this week to 0.4 percent. Yields on benchmark 10.5 percent bonds due December 2026 fell four basis points to 7.29 percent, one basis point lower than a week ago.

Exports from China gained 25 percent last month and imports climbed 29 percent, government figures showed today, both higher than projected by economists in Bloomberg surveys. Sales of passenger vehicles in the country surged 49 percent in January, a state-backed trade group said. China buys about 13 percent of South Africa’s exports, according to government data.

“Chinese data this morning came as a pleasant surprise,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e-mailed comments. “This supports the view of an acceleration in the economy,” underpinning the rand, he said.

The Standard & Poor’s GSCI Index of raw materials surged to a more than four-month high on a closing basis as prices of metals including copper and nickel gained. Metals and other commodities accounted for 53 percent of South Africa’s exports in 2012, according to government data.

The rand extended its gain after the trade deficit in the U.S. narrowed more than forecast in December, led by record exports of petroleum that gave the world’s largest economy a boost at the end of 2012.

Manufacturing Data

The South African currency’s decline earlier this week was fueled by speculation the central bank may lower borrowing costs as manufacturing slows and more people give up job-hunting in Africa’s biggest economy.

Manufacturing growth slowed to an annual 2 percent in December, from a revised 3.7 percent the month before, a report showed yesterday. South Africa’s unemployment rate, the highest of 39 emerging markets tracked by Bloomberg, declined to 24.9 percent in the fourth quarter, from 25.5 percent the previous three months, as more people gave up seeking work, Statistics South Africa said.

The slowdown is “resulting in widespread job losses and rising unemployment, which the Reserve Bank would likely want to counterbalance with looser monetary policy,” Quinten Bertenshaw, a Johannesburg-based analyst at ETM Analytics, wrote in e-mailed comments. “As a result, rate cuts could still be on the cards.”

The Reserve Bank held the repurchase rate at 5 percent last month as a weak rand put pressure on inflation, preventing policy makers from offering more stimulus to the economy after a surprise rate cut in July. South Africa’s gross domestic product expanded 2.5 percent last year, the slowest pace since a recession in 2009, according to the government and central bank estimates.

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