By Paul Dobson and Yoshiaki Nohara Feb. 8 (Bloomberg) -- South Africa’s rand and the Canadian dollar advanced as gains in raw-material prices boosted demand for the currencies of commodity producers. The pound fell. The rand rose against all 16 of the most-traded currencies tracked by Bloomberg and the Canadian dollar gained for a second day. The pound weakened against the dollar and the euro amid deepening concern this year’s U.K. election will end in stalemate. The euro fell for a fourth day against the dollar, trading near the lowest level in eight months. “It’s a relief rally after a weekend when nothing went wrong,” said Simon Derrick, chief currency strategist at BNY Mellon Corp. in London. For sterling, “the thing that is causing concern is the possibility of a hung parliament that brings a lack of certainty about how you deal with the deficit,” he said. The rand climbed 0.5 percent to 7.7489 per dollar at 11:40 a.m. in London, and rose 0.7 percent to 11.5375 yen. The Canadian currency traded at C$1.0692 per U.S. dollar. The euro was little changed at $1.3682. So-called commodity currencies strengthened as copper and crude oil advanced. The rand rose as gold gained 0.2 percent. U.K. Election The pound fell as much as 0.7 percent to $1.5536, the weakest level since May 21, after an ICM Ltd. survey for the Sunday Telegraph newspaper showed the U.K. opposition Conservative party’s lead over Prime Minister Gordon Brown’s Labour party narrowed to nine points, suggesting the election that must be held by June will fail to produce a clear winner. Sterling declined 0.5 percent to 89.82 pence per euro. Simon Johnson, a former International Monetary Fund chief economist, said the U.K. should be added to the same category of countries as Greece and Spain, whose debt ratings are under pressure amid rising debt burdens, the British Broadcasting Corp. reported on its Web site, citing an interview. The euro fell as Greek civil servants union ADEDY said it may join a Feb. 24 strike by Greece’s private-sector union group, GSEE. Greece needs outside help as it tackles the European Union’s largest budget shortfall, said Mohamed A. El- Erian, co-chief investment officer at Pacific Investment Management Co. French Finance Minister Christine Lagarde said at a Group of Seven meeting that the deficit will be “managed.” Euro Declines The euro fell 1.3 percent against the dollar last week, its fourth consecutive weekly decline, as the cost to insure Greek debt climbed to a record. Traders raised bets to the highest level in more than a decade that Europe’s currency will weaken against the dollar, data from the Washington-based Commodity Futures Trading Commission showed on Feb. 5. That may signal it’s poised to rally, according to Commerzbank AG. “If one does not expect any renewed qualitatively bad news, one has to concede that in view of the extreme positioning the risk in euro-dollar is on the upside again,” said Ulrich Leuchtmann, head of currency strategy in Frankfurt. The difference in the number of wagers by hedge funds and other large speculators on a drop in the euro compared with those on a gain -- so-called net shorts -- was 43,741, on Feb. 2, the most since the euro’s debut in 1999, compared with net shorts of 39,539 a week earlier. The 14-day relative strength index of the euro versus the dollar was at 23.61 today, staying below 30 for a third straight day, according to data compiled by Bloomberg, a sign the currency may be poised to change direction. Dollar as Valuable The Dollar Index, which tracks the currency against those of six major U.S. trading partners, snapped three days of gains, sliding 0.3 percent to 80.243. For all the concern over the $1.6 trillion U.S. budget deficit and record debt load, the dollar is as valuable now as 35 years ago, according to Bloomberg Correlation-Weighted Currency Indexes. Measured against a basket of currencies from the Group of 10 nations proportioned by how they trade against each other, the greenback is up about 3 percent since 1975. That was four years after the collapse of the Bretton Woods agreement, set up in 1944 to link currencies to the price of gold. The pound has dropped 34 percent and the Canadian dollar has fallen 6 percent. The U.S. dollar gained 6 percent since November after losing 12 percent in the first 11 months of 2009 as measured by the Bloomberg index. Barclays Capital and Morgan Stanley say the U.S. will grow faster than the rest of the developed world this year and 2011. At the same time, Europe faces worsening finances in Greece, Spain and Portugal, Japan’s economy is struggling and concerns about valuations in emerging markets are increasing. --With assistance from Ron Harui in Singapore. Editors: Justin Carrigan, Rocky Swift To contact the reporters on this story: Paul Dobson in London at +44-20-7673-2041 or pdobson2@bloomberg.net Yoshiaki Nohara in Tokyo at +81-3-3201-7446 or ynohara1@bloomberg.net; To contact the editor responsible for this story: Justin Carrigan at +44-20-7673-2502 or jcarrigan@bloomberg.net

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