The rand climbed to a three-week high against the dollar as U.S. reports signaled a weakening economy and German Chancellor Angela Merkel shored up confidence in the euro, the currency of South Africa’s main trading partner. Bonds rallied, sending yields to five-month lows.
The rand rose to its strongest level in more than a week as investors gauged the currency’s slump this year, the worst amongst emerging-market currencies, is overdone. Bonds gained, driving two-year yields to record lows.
The rand declined for a fourth day, reversing an earlier gain, as importers bought dollars, betting South Africa’s currency will weaken as Europe’s sovereign-debt crisis damps demand for riskier assets.
The rand rallied to the strongest level in an almost four months, surpassing a key technical point, after European policy makers left interest rates at record lows, spurring demand for higher-yielding assets.