SF: Rand Gains on Bets Report to Show Retail Sales Rose Fifth Month
July 14 (Bloomberg) -- South Africa's rand strengthened to a 2 1/2-week high against the dollar before a report that is expected to show retail sales rose for a fifth month as a recovery in Africa's biggest economy gains momentum.
The currency appreciated for a second day, gaining as much as 0.4 percent to 7.5086 per dollar, the strongest since June 24, and traded 0.1 percent up at 7.5262 by 10a.m. in Johannesburg, from a previous close of 7.5355.
Retail sales probably rose an annual 3.7 percent in May after increasing 3.2 percent the previous month, according to the median estimate of nine economists surveyed by Bloomberg. Pretoria-based Statistics South Africa is scheduled to release the data at 11:30 a.m. local time.
"We should see an increase in retail sales but off of a very low base," said Ian Cruickshanks, head of research at Nedbank Treasury in Johannesburg. "The consumer side of the economy is recovering but quite slowly."
Consumer spending, which accounts for two-thirds of South Africa's economy, has been slow to rebound from last year's recession, which caused 870,000 job losses. Sales have gradually improved after the central bank lowered its benchmark rate by 5.5 percentage points since the end of 2008 to boost growth.
Government bonds rose for a seventh day, with the benchmark 13.5 percent security due September 2015 gaining 12 cents to 124.51 rand. The yield on the bond fell 3 basis points to 7.65 percent.
Investors increased bets that South Africa's central bank may lower its 6.5 percent benchmark interest rate when it next meets on July 22, forward-rate agreements show. The cost of three-month contracts for cash in three months fell 1 basis point to 6.28 percent, the lowest since the central bank first introduced its repurchase rate in 1999.
