The pressure is on for the South African central bank to raise interest rates as the cost of exports leaving the country rose the fastest pace in 19 years, changing the dynamic of exchange traded funds (ETFs).

Producer price inflation (PPI) rose to 16.8% as prices rose 2.6% in one month, and factory-gate inflation rose 10% for the sixth month in a row. Mike Cohen for Bloomberg reports that added speculation is focused on the central bank raising the benchmark interest rate for the third time this year.

Anglo American PLC, the world’s fourth-largest diversified mining company, forecast a strong second half of 2008, based on Chinese demand forcopper, coal and platinum production. The fundamentals driving commodities are expected to remain solid, and commodities are going to sustain an up-cycle primarily because of Chinese demand, reports Carli Lourens for Bloomberg. EZA holds 5.4% toward Anglo.

ETFs that could perform based on Anglo’s news and South Africa’s inflation pressures:

• iShares MSCI South Africa Index (EZA): down 11.3% year-to-date; Anglo Platinum is 5.4%; Anglo Gold is 4.3%
• Market Vectors Africa (AFK): launched July 22; Anglo Platinum and Anglo Gold are 1.7% and 1.6%, respectively
• Market Vectors Gold Miners (GDX): down 7.6% year-to-date; Anglo Gold is 6.1%
• Market Vectors Coal (KOL): up 19.2% since Jan. 15 inception

Tags | AFK, Africa, Coal, Copper, Emerging Markets, EZA, GDX, Gold, KOL, Platinum, Precious Metals, South Africa