BLBG:Rand Advances for First Time in Four Days on Plan to Help Euro
The rand strengthened for the first time in four days as European leaders prepared to meet for the first time in 2012 to discuss a plan to save the euro.
The country’s currency appreciated 0.1 percent at 8:1676 as of 8:54 a.m. in Johannesburg, reversing an earlier decline of as much as 0.2 percent. It gained 0.1 percent against the euro to 10.3873.
German Chancellor Angela Merkel and French President Nicolas Sarkozy meet today to craft a master plan for rescuing the euro over the next three months. The two leaders gather in Berlin to flesh out a new rulebook for fiscal discipline negotiated at a Dec. 9 summit that seeks to create a “fiscal compact” for the 17-member euro area. The euro area is South Africa’s largest trading partner.
“Markets are likely to take their cue from these developments today, leaving the rand once again vulnerable to changes in risk sentiment,” Nomvuyo Guma, a Johannesburg-based currency strategist at Standard Bank Group Ltd., wrote in e-mail comments. “As it is, a poor growth prognosis out of India and disappointing Australian retail sales data have already dampened the mood, with the rand likely to come under some pressure.”
India’s economy will expand about 7 percent in the year ending March 31, Prime Minister Manmohan Singh said, less than the December prediction of 7.5 percent. Australia’s retail sales were little changed in November from a month earlier, when they rose 0.2 percent, the Bureau of Statistics said today. The median forecast in a Bloomberg News survey of economists was for a 0.4 percent gain.
South Africa’s 8.25 percent bonds due 2017 increased for a second day, driving the yield down two basis points, or 0.02 percentage point, to 7.53 percent.
To contact the reporter on this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net
To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net
