South African Rand Falls Against Dollar as Gold, Platinum Slump

By Garth Theunissen

Aug. 19 (Bloomberg) -- South Africa's rand weakened against the dollar as the country's stocks fell with the prices of gold and platinum, its biggest exports, reducing revenue prospects for the world's biggest producer of precious metals.

The rand retreated from a one-week high reached yesterday as gold fell below $800 an ounce on concern a stronger U.S. dollar will continue to erode its appeal as an alternative investment. Platinum slumped to an 11-month low on speculation weaker global economic growth will trim demand for vehicles, which use the metal in their pollution-cutting devices known as autocatalysts.

``Slowing economic growth is impacting negatively on commodity prices,'' said Caroline Gorman, a fund manager in London at Augustus Asset Managers, which oversees about $13 billion. ``A stronger dollar is also affecting commodity prices, and the rand's caught up in the fall.''

The rand fell as much as 1.6 percent to 7.8468 per dollar and was at 7.8330 by 4:49 p.m. in Johannesburg, from 7.7222 yesterday. It declined versus all 16 most-actively traded currencies monitored by Bloomberg, losing 1.4 percent against the euro to 11.5056.

Gold slid as much as 2.5 percent to $783.05 an ounce while platinum dropped as much as 6.4 percent to $1,306.50 an ounce. The fall in the metals sparked a 1.7 percent decline in South Africa's FTSE/JSE Africa All Share Index as mining companies including Anglo American Plc, BHP Billiton Plc and Impala Platinum Holdings Ltd slumped. South Africa produces almost 80 percent of the world's platinum and about 10 percent of its gold, typically causing the rand to move in tandem with the metals' prices.

Growth Rebound

The rand fell even after a government report showed economic growth rebounded in the second quarter from the slowest pace in six years. Africa's biggest economy expanded an annualized 4.9 percent, from 2.1 percent in the first three months of the year, Pretoria-based Statistics South Africa said today. Growth was higher than the 4.2 percent median forecast of 16 economists surveyed by Bloomberg News.

``The growth figures were better than consensus but it won't benefit the rand in the long term,'' said Kay Muller a currency researcher at Rand Merchant Bank in Johannesburg. ``The economy is still expected to slow this year, which will hamper South Africa's attract portfolio inflows into the equity market.''

Gross domestic product climbed as mining and manufacturing output, which account for about a fifth of the economy, rebounded after electricity supplies stabilized. Growth may slow to 3.7 percent this year, from 5.1 percent in 2007, according to the median estimate of eight economists surveyed by Bloomberg in May. Expansion is slowing as six interest-rate increases since June last year damp consumer spending.

Government bonds fell, with the yield on South Africa's benchmark 13.5 percent security due September 2015 adding 10 basis to 9.06 percent. The yield on the 13 percent note due August 2010 climbed 8 basis points to 9.70 percent. Yields move inversely to bond prices.

To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net