Platinum Demand Bids South African Rand Higher

South African Rand

The South African rand is slightly higher on the day as metal prices continued to lend a hand in the currency pair’s advance.  Surprising the market today, platinum prices led all commodities, jumping to a record in the London session on speculation of a new investment ETF.  As a result, the spot contracts jumped almost 12 percent on the day, rising to hit just below the $1,400 figure, the highest in 20 years.  With the emerging market currency advancing in tandem with metal prices in recent months, it was no surprise the news would buoy demand in the South African currency.  Gold prices also contributed to the overall bid sentiment on the day, rising once again by almost 1 percent to $627.88 an ounce in the overnight.  Subsequently, speculation has bolstered the currency pair lower for the third consecutive day.  Further swings are unlikely at this point, however, with the lack of economic data for the week and the observance of the thanksgiving holiday in the US.  Equity markets additionally supported the currency.  With metal prices higher, who better to benefit than producers such as Anglo Platinum, the world’s biggest producer of platinum.  Shares of the company rose 5.5 rand to 814.50 rand, gaining the most in five months and bolstering the whole sector on the day.  As a result, with producers in the limelight, the FTSE/JSE Africa All Share index advanced 188 points to 23,792.06 in Johannesburg.  The climb boosted optimism for the underlying currency as the economy is bound to benefit from higher prices.  Exports from the region dedicate about 20 percent to precious metal exports.   

Mexican Peso

Breaking previous dollar strength, the Mexican peso rose for the first day in four as profit taking is taking place ahead of the gross domestic product report expected to be released tomorrow.  However, additionally contributing to the bullish sentiment seems to be an advancing stock market.  On the day, the Mexican Bolsa index added 373.43 points or a whopping 1.5 percent to 24,569.48 opening after being closed due to a holiday yesterday.  Attributed to the spike was growing confidence that the government will be able to restrain rampant spending and attract foreign investment following an announcement that revealed the President-elect’s economic team.  Announced ahead of schedule, the economic team is expected to be headed by Finance Minister Agustin Carstens.  A former deputy managing director of the International Monetary Fund, Carstens is expected, along with five other heads of policy, to stabilize government spending and increase investment in the North American economy.  Coincidentally, the announcement was simultaneous to a rally led by Calderon’s presidential opponent Manuel Lopez Obrador.  At the rally, Obrador declared himself the legitimate president as he backed earlier claims that fraud was at hand.  Calderon won the election by a slim 0.6 percent of the vote.  Subsequently, shares were also led higher as Blackrock Inc. fund manager William Landers recommended Latin America’s largest mobile phone company, America Movil SA, in an interview yesterday. 

Hong Kong Dollar

Pulling back slightly heading into the New York close, Hong Kong dollar strength still remains incrementally in the market as the overnight’s report still lingers on the mind of bullish HKD traders.  In the overnight, economic growth in the economy accelerated at a torrid pace, rising 6.8 percent in the third quarter.  Spurring the higher than expected gross domestic product report was increased spending by consumers and the fastest rise in corporate investment in six years.  Subsequently, real growth in the economy was the fastest in a decade as the figure advanced a whopping 3.5 percent.  The increase in consumer spending can be directly attributed to the wage growth that the economy is witnessing as the unemployment rate dips to 4.5 percent in the month of October.  Based on increased hiring in the quarter, wages have increased for the sixth straight quarter and are boosting spending along with wealth effects of higher stock valuations and stronger confidence in the economy.  However, mainly lending the bullish bias seems to be the more stable inflationary figures in the month.  Consumer prices rose a tepid 2 percent year on year and are likely to keep policy makers from any tightening measure, potentially crimping the positive rate of growth.  Subsequently, the stock market shared the same sentiment as shares were led higher in the overnight.  The Hang Seng Index at the close added 53.67 points to close at 19,008.30, reversing the largest decline in the index since the beginning of October.  Subsequently, China Construction Bank Corp. led gains as Morgan Stanley raised its rating on the national lender.

Singapore Dollar

Already gaining in New York, the Singapore dollar was under pressure in the overnight as speculation emerged of possible central bank intervention.  With the SGD hitting almost nine year highs, policy makers have plenty of reason to intervene as a higher valued currency is likely to hurt exports in the long run.  And with almost 80 percent of gross domestic product being comprised of exports, there looks to be plenty of downside for exporters with the currency’s recent run up.  For the record, the Asian currency has gained a whopping 6.6 percent against the US dollar this year with some calling for more gains as the pair tests a key technical support level.  Subsequently, the effects can already be seen as non-oil domestic exports increased by only 2.1 percent, following a revised 4.5 percent performance the month before.  The relatively lackluster report helps to confirm the likelihood that the Monetary Authority likely sold Singapore dollars to stem the currency’s recent advance.  Nonetheless, stock market sentiment wasn’t dampened as traders turned to bidding up the benchmark on a reversal of yesterday’s misfortune.  Today, the Straits Times index was higher by 31.5 points to 2,802.88.  Stocks were led higher by property shares, which advanced by 2 percent on the day.  However, boosting shares higher was he news that the Singapore Exchange Ltd. may establish a derivatives trading link with South Korea’s stock exchange.  The operator the city-state’s securities and derivatives added 10 cents to S$5.30.