Manufacturing figures give rand a boost

The rand strengthened for a fourth day yesterday as signs of improving manufacturing output around the world boosted equity markets and commodity prices. The local currency, the worst performer last year out of 12 major currencies on Bloomberg, appreciated as much as 0.4 percent and traded 0.3 percent up at R8.0497 to the dollar as of 8.15am yesterday. At 5pm, it was bid at R8.0348 to the greenback. The rand retreated 18 percent last year, its first year of decline since depreciating 27 percent in 2008. A purchasing managers’ index (PMI) in India climbed the most in six months in December, adding to evidence that the global economy is strengthening after German and Chinese factory output reports beat economists’ estimates in the past two days. Data late yesterday was expected to show a US manufacturing gauge climbed to a six-month high in December. “I think the rand’s strength has largely got to do with slightly more buoyant equity markets,” said Investec Bank’s currency and derivatives trading head, David Gracey. The PMI in India rose to 54.2, HSBC Holdings and Markit Economics said yesterday. In China, the index was at 50.3, up from 49 in November, the logistics federation said on Sunday. In Germany, the gauge climbed to 48.4 in December from 48.1, according to report yesterday from Markit Economics. The MSCI emerging markets index climbed 1.3 percent to 929.09 as of 8.38am in Johannesburg, a fourth day of gains. “While the US economic data holds up, the potential for a rand recovery should not be underestimated and the local unit has started the year in this more bullish tone,” said George Glynos, an economist at ETM Analytics. South Africa’s 13.5 percent bonds due in 2015 rose, cutting the yield 0.01 percentage points to 6.734 percent. The yield declined 62 basis points last year, a second year of gains for bondholders. – Bloomberg