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S.Africa's rand falls through 7.00/dollar, stocks rebound
By Stella Mapenzauswa and Helen Nyambura
JOHANNESBURG (Reuters) - South Africa's rand fell nearly two percent to two month lows against the dollar on Friday, hit by weaker commodity prices and central bank forex buying after the domestic currency's recent strong gains.
Government bonds extended Thursday's losses -- with the yield on the benchmark 2015 jumping as much as 12 basis points -- after hawkish central bank comments signalled interest rates might start to rise earlier than initially seen to curb inflation.
Stocks however gained 1 percent, rising for the first time in three days as a rebound in precious metal prices helped miners like Gold Fields and AngloGold Ashanti.
The rand dived to a session low of 7.0390/dollar, its weakest level since March 18, making it the worst performer on Friday among 20 emerging market currencies monitored by Reuters.
By 1645 GMT it traded at 7.0350, down 1.94 percent from Thursday's close at 6.9010.
The rand's fall was partly a factor of risk aversion due to renewed debt worries in the euro zone, Bidvest Bank chief dealer Ion de Vleeschauwer said.
"We must bear in mind that commodities have come off a lot as well (recently), so that will affect the rand on a trade weighted basis. We're still largely driven by commodities, it's understandable for the rand to be looking the worst among emerging markets," he said.
The rand has come off last week's three-year highs and is retracing the retreat seen in February after a sharp rally last December.
"This tells you that probably the rand is struggling to sustain stronger levels in the 6.60's because we've bounced from there twice now. From a broader perspective, we're probably in a 6.60-7.10 type of range," de Vleeschauwer noted.
The central bank had also been constantly in the market since April, taking advantage of recent rand strength to build foreign exchange reserves, market players said.
Government bonds followed the currency down and the four-year bond yield closed 11 basis points higher at 7.73 percent while the 2026 note climbed five basis points to 8.685 percent.
On the bourse, shares of ArcelorMittal South Africa recovered 3.6 percent, having fallen for two straight sessions after the unit of the global steelmaker reported a steep drop in first-quarter profit.
Gold prices were firmer on Friday as buyers sought bargains after the hefty price drop of the previous two days. That helped shares of South African resource firms, said David Shapiro, a fund manager at Sasfin Holdings.
"Generally commodity prices have picked up slighty depending on where you measure them from. We've come back quite strong in resource shares," he said.
Johannesburg's benchmark Top-40 index of blue-chip stocks added 0.99 percent to 28,722.89. The broader All-share index rose 0.88 percent 31,959.93.
Gold Fields, Africa's second-biggest gold producer, gained 2.2 percent to 108.99 rand, while AngloGold, Africa's biggest gold miner, rose 1.9 percent to 310.40. Petrochemical group Sasol gained 1.5 percent to 360.19 rand, helped by stronger crude prices.Fri, 13 May 2011
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