The rand surged to its strongest level against the dollar in four months and is set for the biggest monthly advance this year as investors added to local assets after the Federal Reserve kept rates near zero. The South African currency rose as much as 0.8 percent to 6.5696 per dollar, its strongest level since Dec. 31. It traded 0.7 percent stronger at 6.5784 per dollar at 3:35 p.m. in Johannesburg, bringing its gain versus the dollar this month to 4.4 percent, the biggest since December. The rand rose 0.3 percent to 9.7766 per euro. Fed Chairman Ben S. Bernanke said this week the central bank will maintain its record monetary stimulus, prompting investors to buy higher-yielding assets. The Dollar Index headed for a fifth monthly drop, and gold rose to a record for a third day. Foreign investors were net buyers of 2.3 billion of South African stocks and bonds yesterday, according to data from JSE Ltd., which operates Africa’s largest stock exchange. “We’re seeing a continuation of the trend where the dollar has failed to make any meaningful recovery,” Sean McCalgan, an analyst at Econometrix Treasury Management, which advises clients on currency and bond transactions, said by phone from Johannesburg. “The dollar just continues to be bashed.” Emerging-market equity funds attracted inflows for a fifth straight week, Citigroup Inc. said. The funds lured $1.8 billion in the week ended April 27, taking inflows in the past five weeks to $13.8 billion, analysts led by Markus Rosgen, wrote in a report today that cited EPFR Global data. ‘Long-Term Positive’ The rand extended gains after Africa’s biggest economy posted a trade surplus of 971 million rand ($147 million) in March compared with a deficit of 350 million rand in February, the South African Revenue Service said in an e-mailed statement today. The median estimate of eight economists surveyed by Bloomberg was for a 800 million-rand deficit. “The trade data is going to be a long-term positive for the rand,” McCalgan said. South African 10-year bonds gained for a fifth day, driving yields to the lowest level in three weeks, after the National Treasury said the budget deficit shrank in the year through March. The country posted a deficit of 136.6 billion rand in the first quarter, compared with 167.6 billion rand the same period a year earlier. The deficit was 4.9 billion rand in the month, down from 11.7 billion rand in March 2010, the Treasury said on its website today. The 6.75 percent notes due 2021 added 16 cents to 88.51 rand, sending the yield down 3 basis points, or 0.03 percent, to 8.49 percent, the lowest since April 8. To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net To contact the editors responsible for this story: Gavin Serkin at gserkin@bloomberg.net.

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