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 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 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 swung between gains and losses before U.S. Federal Reserve policy makers end a two-day meeting amid speculation Chairman Ben S. Bernanke will continue stimulus that spurred fund flows into emerging economies.
The rand advanced for the first time in three days as stocks and commodities rose after two German officials indicated a rolling back of resistance to a full sovereign bailout, raising investor appetite 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.