Rand Gains First Day in Six as Commodities Rally; Bonds Advance

The rand strengthened for the first time in six days as a rally in metal prices boosted South Africa’s export prospects. Bond yields fell.

Copper rebounded from its worst level in 20 months and gold rallied from the lowest since September 2010. Metals and other commodities account for more than 50 percent of South Africa’s exports, according to government data.

“The week has been characterized by extreme volatility and massive rand weakness,” Ion de Vleeschauwer, the Johannesburg-based chief dealer at Bidvest Bank, said by phone. “Traders backed off a bit today” with higher commodity prices supporting the currency, he said.

The rand appreciated 0.3 percent to 10.2158 per dollar by 3 p.m. in Johannesburg, paring its first weekly decline in three to 2.6 percent. Yields on benchmark 10.5 percent bonds due December 2026 dropped seven basis points, or 0.07 percentage point, to 8.20 percent. The yield is up 43 basis points this week.

South Africa’s currency retreated 2.5 percent in the previous two days and bond yields soared to one-year highs after Federal Reserve Chairman Ben S. Bernanke said bond buying that has fueled gains in markets around the world may be trimmed this year should risks to the U.S. economy continue to decrease. The Fed may trim its monthly bond purchases by $20 billion to $65 billion in September, according to economists in a Bloomberg survey.

Foreign investors sold a net 2.9 billion rand ($284 million) of South African bonds yesterday, bringing net sales for the month to 4.61 billion rand, according to JSE Ltd. data.

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