S. Africa Rand Rebounds From 2-Week Low on Exporter Dollar Sales

South Africa’s rand gained against the dollar, pulling back after it depreciated to near a key technical level that spurred companies to convert export earnings into the local currency.

The rand rebounded after failing to weaken below 10.30 per dollar, a significant support level, said Mohammed Nalla, head of strategic research at Nedbank Group Ltd. Earlier today, the currency depreciated, extending a 2.8 percent slide this month after U.S. jobs data increased speculation of a stimulus reduction and before reports this week that may show mining output contracted in Africa’s biggest economy. Support and resistance are levels where traders cluster buy or sell orders.

“You’d need to see a sustained break of 10.30 per dollar before it can push much weaker,” Nalla said by phone from Johannesburg. “Exporters came in with a bit of appetite at those levels.”

South Africa’s currency gained 0.5 percent to 10.1554 per dollar by 4 p.m. in Johannesburg. It slumped as much as 0.9 percent today to 10.2983, the weakest level since June 24. Yields on benchmark 10.5 percent bonds due December 2026 were little changed at 8.11 percent.

U.S. employers added 195,000 workers last month, the report on July 5 showed, beating the increase of 165,000 predicted by economists. Federal Reserve Chairman Ben S. Bernanke said the central banks may slow bond purchases that fueled demand for higher-yielding assets if the economy continues to improve. Mining production in South Africa contracted in May while manufacturing slowed, reports may show this week.

Mining Production

“Strength in payrolls numbers with little doubt reinforced concerns about Fed tapering” of asset purchases, sending emerging-market currencies including the rand weaker, Bruce Donald, a currency strategist at Standard Bank Group Ltd., said in e-mailed comments. The Johannesburg-based lender adjusted its forecast for the rand to 10 per dollar by the end of the year from 9.75.

Mining production contracted 4.1 percent in May from a decline of 0.4 percent the previous month, a report may say on July 11, according to the median estimate of economists in a Bloomberg survey. Growth in manufacturing slowed to 2.9 percent from 7 percent, a separate report may show on the same day.

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