Resource-Exporter Currencies Climb as Commodities, Oil Advance

  • South African rand, Brazilian real lead gains against dollar
  • Gasoline futures surge as U.S. supplies fall, demand rises

The currencies of commodity-exporting nations rose as raw-materials prices climbed for the seventh time in the past eight days.

The Brazilian real rallied to a six-month high, while the South African rand and Canadian dollar climbed more than 1 percent, boosted by rising energy and industrial metals prices. Gains for natural resources were driven by a 4.5 million-barrel decline in U.S. gasoline supplies and demand for the motor fuel, which increased to a six-month high. The euro erased losses against the dollar before Thursday’s European Central Bank policy decision.

"It’s a move being driven by broader risk sentiment," said Matt Weller, an analyst at Gain Capital Holdings Inc.’s unit in Grand Rapids, Michigan. "There really is quite a tailwind for all those commodities, and by extension, commodity currencies."

The currencies of raw-materials exporters have arrested declines during the past month as natural resources prices climbed. The foreign-exchange rebound follows last year’s plunge on concern that Chinese economic growth is slowing, damping the outlook for demand from  the world’s second-largest economy.

The real advanced 1.7 percent against the dollar, as of 5 p.m. in New York, reaching the strongest level on a closing basis since Aug. 31. The rand gained 1.5 percent and the Canadian dollar rose 1.2 percent.

The dollar added 0.7 percent to 113.35 yen and added 0.1 percent to $1.0999.

"Some of the commodity-exporting currencies are getting break here" from a rebound in metals and oil as expectations for China’s economy stabilize, said John Stoltzfus, Oppenheimer & Co.’s chief market strategist in New York.

The loonie, as Canada’s currency is known for the image of the aquatic bird on the C$1 coin, touched an almost four-month high after policy makers kept their benchmark interest rate unchanged, saying an economic recovery remains on track and inflation risks are balanced.

The U.S. dollar’s momentum is slowing relative to its counterparts in resource-exporting nations such as Canada, Australia and New Zealand, which are undergoing "counter-trend rallies," said Jerry Parker, chief executive officer of Chesapeake Capital Corp., a hedge fund in Richmond, Virginia that manages about $175 million.

Before it's here, it's on the Bloomberg Terminal.