South Africa’s Rand Rises Against Dollar, Euro as Stocks Rally

Nov. 4 (Bloomberg) — South Africa’s rand rose against the dollar as gains in stocks on better-than-expected earnings eased concern the global economy is slowing, encouraging purchases of higher-yielding assets.

The rand traded below 10 per dollar as advances in Asia and Europe boosted the MSCI World Index of stocks for a sixth straight day. South Africa’s currency strengthened even after an industry report showed vehicle sales fell for a 19th straight month in October, indicating the continent’s biggest economy is faltering.

“Globally we’re seeing a general improvement in positive sentiment which has fed through to European equities from Asia,” said Jon Harrison, an emerging-markets currency strategist in London at Dresdner Kleinwort. “Lower global interest rates help alleviate some of the strains in the financial system and that helps short-term risk appetite.”

The rand climbed as much as 1.9 percent to 9.8506 per dollar and was at 9.9125 by 1:12 p.m. in Johannesburg. It also advanced versus all 16 most-actively traded currencies monitored by Bloomberg, adding 0.7 percent to 12.6187 per euro.

South Africa’s currency still faces “challenges in the medium to long term” and will “trend much weaker” next year, Harrison said. It may slip to as low as 12 per dollar in the next three to six months, he predicted.

“Emerging markets aren’t going to avoid the impact of a global economic slowdown,” Harrison said. “We still expect to see further sell-offs in riskier asset classes.”

Read full article: South Africa’s Rand Rises Against Dollar, Euro as Stocks Rally

Source: South Africa’s Rand Rises Against Dollar, Euro as Stocks Rally