South African Rand Rallies against the Dollar on Favorable World Banks’ Report

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South African Rand Rallies against the Dollar on Favorable World Banks’ ReportThe South African rand surged together with other emerging market currencies, eroding its earlier declines against the dollar in 2014 as growth prospects for the developing markets soared, boosting their assets.

The rand rose as foreign investors rushed to purchase South African bonds for the third consecutive day on Monday, the biggest such extent in two weeks. The dollar’s 16 major counterparts analyzed by Bloomberg, the rand included, rose against it.

The World Bank reported yesterday that it expects Sub-Saharan Africa to grow by 5.2 percent, up from 4.7 percent last year.

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“Some concerns about growth are starting to lift globally and that is going to help emerging markets and their currencies,” Vivienne Taberer, a Cape Town-based fund manager at Investec Asset Management told Bloomberg News. “Foreign flows have started to turn a bit more supportive last week. The rand looks cheap.”

The rand was trading 0.6 percent higher at 10.4604 per dollar as of 2:45 p.m. in Johannesburg, its highest intraday level since January 1. Yields on government bonds that mature in December 2026 slid 0.04 percentage points, or four basis points, to 8.328 percent, as it appeared headed for the lowest close since January 13.

The dollar has been posting weak performance this week after U.S. Labor Department announced last week that the economy had absorbed fewer jobs than economists had predicted. This led investors to speculate that the interest rates will remain as they are for some time.

In an unexpected move, the South African Reserve Bank hiked its benchmark interest rate on January 29, following identical actions by India, Turkey and Indonesia, sending the rand 8.2 percent higher.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com