BLBG:Rand Rebounds From Two2-Month Low Versus Dollar as Gold, Platinum Rise
The rand gained for the first day in four, rebounding from a two-month low, after gold soared to a record and other commodity prices rallied, outweighing concern that the European and U.S. debt crises will worsen.
The rand gained as much as 0.5 percent to 6.9571 per dollar, and traded 0.4 percent stronger at 6.9631 as of 10:01 a.m. in Johannesburg. The currency depreciated 0.2 percent to 9.8534 per euro.
Gold rose as high as $1,610.10 in London as the sovereign- debt woes spurred demand for the metal as a haven, and platinum climbed to the highest in more than a month. The two metals together account for 20 percent of South Africa’s export earnings. The nation’s benchmark stock index rose, led by mining companies including Anglo American Plc and BHP Billiton Ltd.
“We can breathe easier,” John Cairns and Nema Ramkhelawan, currency strategists at Rand Merchant Bank in Johannesburg, said in a research note. “Problems are certainly not over, however. Multi-day risks remain very much for rand losses, and as much as the market isn’t panicking, it is not clear that we shouldn’t.”
The premium of one-month options to sell rand versus the dollar over those to buy rand has climbed 86 basis points, or 0.86 percentage point, to 3 percentage points in the past two weeks, indicating options traders believe the rand is more likely to decline than to gain in coming weeks.
European Union government chiefs plan to meet for the second time in a month on July 21, aiming to break a deadlock over a new Greek rescue that has spooked investors. Spanish and Italian bonds yields surged yesterday, piling pressure on officials to end the turmoil. Spain and Greece sell as much as 5.75 billion euros ($8.2 billion) of bills today.
South African bonds gained. The 6.75 percent securities due 2021 added 12 cents, to 88.83 rand, driving the yield down two basis points, or 0.02 percentage point, to 8.46 percent.
To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net
To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net
