South African Rand Heads for Weekly Gain as Commodities Rally

By Garth Theunissen

Aug. 22 (Bloomberg) -- South Africa's rand was poised to snap two weeks of losses against the dollar as gains in gold and platinum improved revenue prospects for world's biggest producer of precious metals.

The rand was the best performer of the 16 most-actively traded currencies monitored by Bloomberg this week as gold headed for its biggest weekly advance in seven years and platinum surged for a third day. The metals rose with other commodities as a weaker dollar and higher crude oil prices boosted demand for alternative investments and hedges against inflation.

``Commodities are a strong theme for the rand at the moment,'' said Kay Muller, a currency researcher at Rand Merchant Bank in Johannesburg. ``Strong gains in oil and a weaker dollar are fuelling gold and platinum, which is positive for the rand.''


The rand was little changed at 7.6585 per dollar by 9:39 a.m. in Johannesburg, leaving it 2.7 percent stronger than its Aug. 15 level of 7.8707. It climbed 1.4 percent versus the euro on the week, to 11.3969.

Commodities headed for their biggest weekly advance in 33 years as the dollar traded near the lowest level in more than two weeks against the yen and headed for a weekly loss versus the euro.

Gold climbed 6.4 percent in the week to $834.08 an ounce, the biggest weekly gain since May 2001 and the first in six weeks. Platinum surged 7.4 percent from its Aug. 8 close to $1,472.25 an ounce. 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.

Crude oil rose 6.8 percent this week to $121.52 a barrel, headed for its biggest weekly increase in more than two months.

Government bonds fell this week, with the yield on South Africa's benchmark 13.5 percent security due September 2015 adding 11 basis points to 9.25 percent. Yields move inversely to bond prices.

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