Rand Drops for Second Day as Commodities Fall on Growth
The rand declined for a second day as commodities retreated after China’s trade data missed estimates, raising concern a slowdown in the world’s biggest consumer will erode demand.
The currency depreciated as much as 1.1 percent to 8.1698 and traded 0.8 percent weaker at 8.1448 by 12:11 p.m. in Johannesburg, the worst performer out of 16 major currencies monitored by Bloomberg. Yields on the nation’s 6.75 percent bonds due 2021 rose three basis points to 6.75 percent. Standard & Poor’s GSCI index of commodities declined 0.9 percent, snapping a five-day winning streak.
China’s exports rose 1 percent in July from a year earlier while imports increased 4.7 percent, resulting in a trade surplus of $25.15 billion, the customs bureau said today. The export growth compares with the 8 percent median estimate of 32 analysts in a Bloomberg News survey. Economists forecast import gains of 7 percent and a trade surplus of $35.05 billion.
“They’re not importing as much of the basic commodities they need for manufacturing because they are not exporting as much so then commodity prices drift off and commodity producers pull back a little,” Ian Cruickshanks, the head of treasury strategic research at Johannesburg-based Nedbank Group Ltd. (NED), said by phone.
Metals and other commodities account for 45 percent of South Africa’s total exports, according to government data.
Importer buying of dollars after the rand reached a three- month high against the U.S. currency yesterday contributed to the rand’s weakness today, Cruickshanks said.
“At 8.05 to 8.10, there is a bit of technical resistance,” he said. “At that level you have importers coming in.”
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