South African Rand Has Weekly Gain Versus Dollar as Stocks Rise

By Mike Cohen

Nov. 15 (Bloomberg) -- South Africa's rand rose for a second day against the dollar, posting a weekly gain, as stocks climbed and investors increased stakes in higher-yielding, emerging-market assets.

The rand advanced 1.2 percent this past week, paring its decline this year to 32 percent as foreigners sold the country's shares and bonds, partly on concern it will struggle to finance its current-account gap amid the world's worst financial-market crisis since the 1930s. Europe's Dow Jones Stoxx 600 Index rose 2.1 percent and the MSCI Asia Pacific Index added 1.2 percent.

``The rand is taking its direction from offshore equity markets,'' said George Glynos, managing director in Johannesburg of Econometrix Treasury Management, which advises clients on bond and foreign-exchange transactions. ``The European equity markets are all in the green at the moment. That is one of the reasons why emerging markets, generally speaking, are responding to lower levels of risk aversion.''

Against the dollar, the rand gained 2.1 percent to 10.0473 late yesterday in Johannesburg, from 10.2600 on Nov. 13. Earlier, it fell to as low as 10.5051.

South Africa's benchmark FTSE/JSE Africa All Share Index of stocks climbed for the first day in four, advancing 1.7 percent. The index fell 33 percent this year.

The price of platinum rose 0.8 percent yesterday, while gold added 0.9 percent. The two metals are South Africa's biggest exports.

Government bonds climbed, with the yield on the benchmark 13.5 percent security due September 2015 falling 14 basis points to 8.78 percent. The yield on the 13 percent note maturing in August 2010 lost 13 basis points to 9.2 percent. Yields move inversely to bond prices.

``Over the past couple of weeks, we have also very clear indications that foreigners are starting to see value in South African bonds,'' Glynos said. ``We have seen bond inflows to the tune of about 11 billion rand so far for the month of November.''

To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net