The Sunday News
JOHANNESBURG — The rand stumbled more than 1 percent last Friday to its softest in nearly a week after the trade balance swung into a wide deficit, pointing to continued pressure on the current account. SA has long been plagued by twin deficits on its budget and balance of payments position, making the rand particularly vulnerable during bouts of global risk aversion, when investment flows out of emerging markets.
By 17:21 GMT the local unit was 1,1 percent softer at 11,6670/$, compared with Thursday’s New York close.
The rand headed south after data from revenue agency Sars showed SA recorded a R24,22bn trade deficit in January, after a R6,67bn surplus the previous month.
“Lower international oil prices have seemingly not eased the pressure on the country’s trade dynamics as the South African economy continues to import more than it exports to the rest of the world,” NKC analyst Bart Stemmet said.
“Moreover, a large proportion of the SA export sector is unable to benefit fully from the weak rand due to structural challenges, including labour unrest and electricity blackouts.”
Protracted strikes in the mining and manufacturing sectors helped weaken the rand about 10 percent against the dollar in 2014.
The currency has shed another 5 percent so far this year, as investors fret about the impact of the worst electricity crunch since 2008.
Government bonds fell alongside the rand, pushing the yield on paper due in 2026, 9 basis points higher to 7,645 percent. — fin24
