South African Rand Trades at Six-Month High Against U.S. Dollar

By Garth Theunissen

Aug. 1 (Bloomberg) -- South Africa's rand rose for a second day against the dollar, to a six-month high.

The rand climbed as much as 0.6 percent to 7.2887 per dollar, the strongest since Jan. 31, and was at 7.3130 by 8:08 a.m. in Johannesburg, from 7.3360 late yesterday. Against the euro, the currency advanced 0.8 percent to 11.3555.

South Africa's currency was the best performer in the world against the dollar and euro in July on bets accelerating inflation will spur the central bank to lift interest rates, boosting demand for the rand in so-called carry trades.

In carry trades, investors borrow lower-yielding currencies such as the Swiss franc to buy higher-yielding assets, such as those denominated in rand, typically sending the target higher and earning the spread between the two. Traders take the risk currency moves will erase the profit.

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