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South African reserves may have increased as rand gets stronger

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South Africa’s gold and foreign currency reserves probably rose in July as the rand strengthened to an 11-month high, making it cheaper for the central bank to buy dollars.

Gross reserves increased to $36.1 billion from $35.8 in June billion, according to the median estimate of four economists surveyed by Bloomberg. The Pretoria-based central bank will publish the data on its Web site at 8 a.m. on Aug. 7.

The rand climbed as high as 7.6131 against the dollar last month, its strongest since August 2008, enabling the Reserve Bank to buy more foreign currency to add to its reserves. The bank has increased reserves to a record to cover rising imports as the current account deficit, the broadest measure of trade in goods and services, widened to 7 percent of gross domestic product in the first quarter.

“Traditionally, we’ve seen the Reserve Bank being more active in the market” when the rand strengthens, said Carmen Altenkirch, an economist at Nedbank Group Ltd., South Africa’s fourth-biggest bank. “Reserves are now at a comfortable level.”

Other economic data released this week include the Purchasing Managers Index, due to be published by Kagiso Securities and the Bureau for Economic Research today. The index gained for a second month to 37.9 in June, Kagiso said July 1.

The National Association of Automobile Manufacturers of South Africa will release vehicle sales data tomorrow, while the South African Chamber of Commerce and Industry is scheduled to publish its business confidence index on Aug. 5.

Corporate News

In corporate news, Absa Group Ltd., controlled by Barclays Plc, will report first-half earnings today. The lender said on June 23 that per-share earnings, excluding one-time items, will fall as much as 35 percent in the six months through June.

Nedbank Group Ltd., which said on July 20 that profit fell as much as 37 percent, will publish first-half earnings on Aug. 5. Old Mutual Plc, the insurer that controls Nedbank, will also report earnings on the same day.

Gold Fields Ltd., Africa’s second-biggest producer of the metal, may say on Aug. 6 that profit fell 25 percent to 1.52 rand a share, according to a median forecast of six analysts surveyed by Bloomberg.

The rand fell 1.1 percent to 7.8318 against the dollar last week. The currency dropped 1.4 percent in the month, the first decrease in six months. Bonds retreated, with the yield on the R157 security, due 2015, adding 1 basis point, or 0.01 percentage point, to 8.58 percent.

The benchmark FTSE/JSE Africa All Share index advanced 1.3 percent, its fourth weekly gain. The biggest gainers of the 40 largest companies on the stock exchange were Lonmin Plc, which rose 13 percent, and SABMiller Plc, which advanced 5.8 percent.

Source: Bloomberg

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