Rand Gains First Day in Four as Stocks, Metals Prices Advance

The rand strengthened for the first time in four days as stocks and metals prices rose after China vowed to maintain its growth target.

The currency gained 0.4 percent to 9.0391 per dollar by 3:43 p.m. in Johannesburg, after declining 3 percent in the prior three days. Yields on benchmark government 10.5 percent bonds due December 2026 fell 3 basis points, or 0.03 percentage point, to 7.34 percent.

China will keep its economic growth target at 7.5 percent for this year and plans a 10 percent jump in spending. The nation is the biggest buyer of energy and industrial metals and commodities accounted for 53 percent of South Africa’s export earnings in 2012, according to government data.

The MSCI Emerging-Markets stock gauge gained, snapping two days of declines. South Africa’s benchmark stock index rose as much as 1.2 percent, the most in two months as platinum and gold advanced. South African producer prices rose 5.8 percent in January from a year ago, compared with 6.3 percent in December, a government report today showed.

“While producer price momentum slowed in January, this is expected to reverse in months ahead due to the weaker rand and its effect on” gasoline costs, Ilke van Zyl, an economist at Vunani Securities, said in an e-mailed note to clients. Interest rates will remain unchanged as inflation pressures build, Van Zyl said.

The Reserve Bank has held its benchmark interest rate at 5 percent, the lowest level in more than 30 years, since a surprise cut in July. The bank’s mandate is to keep consumer-price inflation within a range of 3 percent to 6 percent. It fell to 5.4 percent in January from 5.7 percent in the previous month.

The rand’s three-month implied volatility against the dollar was 12.82 percent, the highest of 16 major currencies, compared with 12.28 percent a week ago.

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