South Africa’s Rand Post Weekly Gain
Posted by Harold Kent on June 22nd, 2008
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South Africa’s rand posted a weekly gain as prices of commodities such as gold and platinum, the nation’s biggest exports, advanced.
South Africa produces 80 percent of world’s platinum and 10 percent of its gold, meaning the rand often moves in tandem with the metals.
“Commodities have risen and that’s helped the rand,” said Ion de Vleeschauwer, head of foreign-exchange trading at Johannesburg at Bidvest Bank Ltd, which runs the country’s biggest chain of moneychangers during a Bloomberg interview. “The weakness in the dollar has also supported the currency.”
The rand rose as much as 0.5 percent yesterday to 7.9107 per dollar, its strongest level since June 11, and was at 7.9725 in Johannesburg. Platinum has advanced 1.6 percent since May 13, to $2,068 an ounce, extending its rally this year to 35 percent, on concern miners will go on strike in July in protest at power rationing, further cutting production that has already been hampered by the nation’s electricity shortage.
Gold posted its biggest weekly gain in four months, adding 3.7 percent to $901.03 an ounce, as investors bought the metal as a hedge against inflation.
Current Account Woes
The South African currency climbed even as the country’s current account deficit widened to a 26-year high in the first quarter. The current account gap, the broadest measure of trade in goods and services, increased to 9 percent of gross domestic product, from 7.5 percent in the final quarter of 2007, the Pretoria-based South African Reserve Bank said yesterday.
On June 13, the rand fell as low as 8.1783 per dollar, its worst since March 31, and a day after Reserve Bank Governor Tito Mboweni signalled the current account deficit had widened.
South African government bonds gained for the first week in five, with the yield on the benchmark 13.5 percent security due September 2015 falling 3 basis points to 10.47 percent. Yields move inversely to bond prices.
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