South Africa’s rand strengthened for the first day in four as prices of the nation’s commodity exports gained and on speculation foreign investors continued to purchase the currency to benefit from its yield advantage. The rand appreciated as much as 0.6 percent to 6.8371 per dollar and traded at 6.8644 by 1 p.m. in Johannesburg, from a previous close of 6.88. Against the euro, the rand added 0.4 percent to 9.0401. “Rand strength has been significantly boosted by massive inflows into South Africa by foreigners,” Tradition Analytics analysts, led by Quinten Bertenshaw in Johannesburg, wrote in a client note today. “The longer-term trend continues to favor ongoing rand resilience and strength.” Foreign investors have purchased a net 101.1 billion rand ($15 billion) of South African stocks and bonds this year as near zero-interest rates in developed nations spurred demand for higher-yield investments, according to data from JSE Ltd., the company that runs South Africa’s main bourses. The purchases helped the rand extend its rally since the start of last year to more than 37 percent. South Africa’s 5.5 percent benchmark interest rate compares with deposit returns of 0.1 percent in Japan and 0.25 percent in the U.S. Gold and platinum, which together account for about a fifth of South Africa’s exports, rose as investors purchased the precious metals by buying exchange-traded products backed by the commodities. Government bonds advanced in South Africa for a second day, with the benchmark 13.5 percent security due September 2015 climbing 9 cents to 123.84 rand. The yield declined 2 basis points, or 0.02 percentage points, to 7.43 percent. To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

Source