S.Africa’s rand hits two-week high on fiscal cliff optimism

1 Dec

JOHANNESBURG (Reuters) – South Africa‘s rand rallied to a two-week high on Thursday on hopes that U.S. policymakers would reach an agreement to reduce the debt pile of the world’s biggest economy.

The rand was at 8.7690 to the dollar at 1550 GMT on Thursday, 0.5 percent stronger than Wednesday’s New York close, after reaching a high of 8.7470 earlier in the session.

The currency has traded within a narrow 8.80-9.00 band in the last two weeks and failed to break free even after a deal on Monday by Greece’s international lenders to reduce the country’s debt.

Hopes that President Barack Obama‘s administration and Congressional leaders would reach a deal to avert the “fiscal cliff” before the January 1 deadline lifted world equities and commodities on Thursday, as well as the rand.

“International sentiment is good surrounding the ability for the fiscal cliff to be resolved,” said one trader. “Unless we have bad news surrounding the negotiations around the fiscal cliff I think we can probably strengthen a bit further.”

South African producer inflation rose to 5.2 percent year-on-year in October, from 4.2 percent in September, Statistics South Africa said on Thursday. Economists polled by Reuters forecast a rise to 4.8 percent.

Government bonds were firmer, with the yield on the 2026 instrument declining 2 basis points to 7.565 percent and that on the 2015 paper falling 1.5 basis points to 5.47 percent.

Source: http://news.yahoo.com/africas-rand-hits-two-week-high-fiscal-cliff-054248287–finance.html

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