BLBG:Rand’s Rally the Longest in 16 Months as Gold Trades Near to a Record High
The rand strengthened for an eighth day in the longest rally in 16 months as gold, a key South African export, traded near a record high on concern that the U.S. may default.
The currency of Africa’s largest economy advanced 0.5 percent to 6.6381 against the dollar as of 10:09 a.m. in Johannesburg, heading for the longest rally since the eight days through March 9, 2010. The rand appreciated for a third day against the euro, adding 0.4 percent to 9.5389.
Gold climbed as much as 0.4 percent to 1,619.85 an ounce, less than $12 from its record, as U.S. policy markets pushed competing proposals to increase the nation’s debt ceiling before an Aug. 2 deadline to avoid a default. Gold and platinum account for about 20 percent of South Africa’s export earnings, according to government data.
“Gold came off from the record highs but the level is still supportive for the rand,” BNP Paribas SA strategists, led by London-based Paul Mortimer-Lee, wrote in an research report today.
U.S. lawmakers remain deadlocked. Republican leaders plan to bring House Speaker John Boehner’s reworked deficit-cutting proposal to a vote today, while Senate Majority Leader Harry Reid called his alternative “the only true compromise.”
“The only conclusion to be drawn from the poor economic fundamentals abroad and the weak credit cycle domestically is that the rand might remain stronger for longer,” Tradition Analytics researchers led by Johannesburg-based Quinten Bertenshaw wrote in a note today. “That does not preclude importers from taking advantage around current levels, but it does mean that corporates should plan for the rand remaining sub 6.9000 per dollar for a while to come.”
Inflation Report
A government report is likely to show that South Africa’s producer-price inflation rate was unchanged at 6.9 percent in June, according to a median of 16 economists surveyed by Bloomberg ahead of the announcement today.
The government’s 13.5 percent notes due 2015 rose for the third day, gaining 3 cents to 121.439 rand, pushing down the yield by one basis point, or 0.01 percentage point, to 7.355 percent. The 6.75 percent securities due 2021 climbed 6 cents to 89.883 rand, driving the yield down one basis point to 8.289 percent.
To contact the reporter on this story: Chris Kay in London at ckay5@bloomberg.net
To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net
