By Garth Theunissen Nov. 23 (Bloomberg) -- The rand rallied the most among emerging-market and major currencies as gold surged to another record and analysts bet a report tomorrow will show Africa’s biggest economy has pulled out of recession. South Africa’s currency strengthened the most in two weeks, gaining as much as 1.9 and trading 1.8 percent higher at 7.4735 by 4:47 p.m. in Johannesburg, from a close of 7.6117 on Nov. 20. Its gains against the dollar were the biggest among 25 developing-nation and 16 most actively traded counterparts. Gold rallied 2.6 percent to a record $1,174 an ounce, its sixth advance to an all-time high in two weeks, on speculation more investors will buy the precious metal as an alternative to a weakening dollar. South Africa’s $277 billion economy expanded an annual 0.5 percent in the three months through September, according to the median estimate of 23 economists surveyed by Bloomberg. “Improving investor sentiment and a higher gold price are the main reasons behind the very strong performance in the rand today,” said Lutz Karpowitz, a currency strategist at Commerzbank AG in Frankfurt. GDP data tomorrow “should show South Africa is moving out of recession,” he said. South Africa’s economy probably recovered in the third quarter, ending three consecutive quarters of contraction, as investment in roads, stadiums and ports for next year’s FIFA World Cup and a rebound in manufacturing boosted output. An economic recovery may boost demand for South African assets, where the benchmark interest rate is 7 percent compared with almost zero in the U.S., Japan and Europe. Carry Trade “A positive GDP number would certainly be beneficial for the rand,” said Russell Lamberti, an analyst at Econometrix Treasury Management in Johannesburg, which advises clients on bond and foreign-exchange transactions. “A return to growth would enhance any returns offered by local equities, which just adds to the carry-trade attractiveness of the rand.” The carry trade, which involves currency transactions that aim to take advantage of global interest-rate differentials, has helped the rand gain 26 percent versus the dollar in 2009. Foreign investors purchased a net 95 billion rand ($12.6 billion) of South African assets this year, data from the country’s stock and bond exchanges show. Government bonds fell, pushing up the yield on the benchmark 13.5 percent security due September 2015 by one basis point to 8.35 percent. The bond’s price, which moves inversely to the yield, lost 3 cents to 123.31 rand. The rand added 0.9 percent against the euro to 11.2140, from 11.3118 at the end of last week To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net

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