BLBG: Rand Falls, Snapping 2-Day Gain Against Dollar, as Metals Drop
South Africa’s rand snapped a two-day advance against the dollar as weaker prices of gold and platinum, the nation’s biggest export earners, crimped earnings prospects for the world’s biggest producer of precious metals.
The rand retreated from near its strongest level in more than 2 1/2 months as gold fell for a third day and platinum slid for the first day in three. South Africa produces almost 80 percent of the world’s platinum and about 10 percent of its gold, typically causing the rand to move in tandem with the metals’ prices.
“Both gold and platinum have pulled back from their recent highs which gives some negative impetus to the rand given that we’re seeing very thin trading volumes at present,” said George Glynos, managing director of Econometrix Treasury Management, which advises clients on bond and foreign-exchange transactions in Johannesburg. “From a technical perspective the rand is also due for a bit of a correction after a good run of late.”
The rand declined as much as 1.9 percent to 9.4942 per dollar and traded at 9.4700 as of 12:00 p.m. in Johannesburg, from 9.3147 on Jan. 2, when the currency posted its fourth week of gains. It slipped versus 13 of the 16 most-actively traded currencies monitored by Bloomberg, adding 0.1 percent against the euro to 12.9522.
Gold for immediate delivery fell as much as 1.5 percent to $861.91 an ounce, extending bullion’s decline to 2.3 percent since the start of 2009. Platinum, which competes with gold as South Africa’s biggest export, dropped as much as 1.7 percent to $930.50 an ounce.
Financial Crisis
Expectations of a slowdown in manufacturing also drove the rand lower. Factory output, which accounts for about 16 percent of the $278 billion economy, fell 1.6 percent from a year ago, after declining by the same pace in October, according to the median estimate of three economists surveyed by Bloomberg. The statistics office is scheduled to publish the data on Jan. 8.
The rand dropped even as South Africa’s benchmark FTSE/JSE Africa All Share Index of stocks climbed for a fifth straight day, adding 3.1 percent, the biggest gain since Dec. 10.
Government bonds fell, pushing the yield on the benchmark 13.5 percent notes due September 2015 up 6 basis points to 7.28 percent.
