South African Bond Yields Climb to One-Year High as Rand Gains

South African bonds yields rose to the highest in a year as foreign investors sold the nation’s debt and equities. The rand gained as exporters converted earnings from abroad to the local currency.

Foreigners sold a net 7 billion rand ($691 million) of bonds last week and 608 million rand of equities, according to Bloomberg calculations from JSE Ltd. data, after the Federal Reserve indicated it may start paring asset purchases should risks to the U.S. economy abate. Gold and platinum slumped and the dollar gained as Goldman Sachs Group Inc. lowered its estimate on China’s economic expansion amid concern over a cash crunch in the largest purchaser of South African raw materials.

Yields on 10.5 percent rand-denominated government debt due December 2026 jumped eight basis points, or 0.08 percentage point, to 8.31 percent as of 4:02 p.m. in Johannesburg, heading for the highest closing level in a year. The rates climbed 45 basis points last week. The rand gained 0.6 percent to 10.0979 per dollar after earlier falling as much as 1.4 percent. The FTSE/JSE Africa All Share Index declined 2.6 percent.

“We’re seeing inflows from local companies repatriating offshore earnings back into the country,” helping to support the rand, Ion de Vleeschauwer, head currency dealer at Johannesburg-based Bidvest Bank Ltd., said by phone today. “It’s keeping a lid on the market” and the rand will probably weaken once the flows dry up in line with a stronger dollar and the weaker bond and equity markets, he said.

The rand, yen and Australian dollar are among the only gainers against the dollar today of 16 major currencies monitored by Bloomberg. South Africa’s unit has weakened 16 percent against the dollar this year, 2013’s worst performer, while the yen and Australian dollar have both dropped about 11 percent.

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