The rand weakened to the lowest level in almost four years against the dollar after South Africa posted a current-account shortfall wider than analysts’ estimates in the fourth quarter.
The currency depreciated as much as 1.3 percent to 9.2122 per dollar, the lowest since April 15, 2009, according to data compiled by Bloomberg. The rand traded 0.5 percent weaker at 9.1329 by 3:55 p.m. in Johannesburg, bringing its slide this year to 7.2 percent, the most among more than 20 emerging-market peers monitored by Bloomberg. Yields on the benchmark 10.5 percent bonds due December 2026 dropped one basis point, or 0.01 percentage point, to 7.38 percent.
The current-account deficit narrowed to 6.5 percent of gross domestic product, according to central bank data. That compares with a 6.3 percent median estimate of 10 analysts in a Bloomberg survey. The gap for the third quarter was revised to 6.8 percent of GDP from 6.4 percent.
“It is a bit of a shocker for the rand,” Mohammed Nalla, head of strategic research at Nedbank Group Ltd. (NED) in Johannesburg, said by phone. “The worry is that the previous number was revised upwards. That’s a very large negative.”
The deficit, the broadest measure of trade in goods and services, almost doubled to 6.3 percent in 2012 from 3.4 percent a year earlier as mining strikes and slower growth in Europe cut exports. South Africa’s monthly trade deficit jumped to a record in January as mining production declined in the wake of labor disputes.
Mining output, which accounts for 53 percent of the nation’s exports, probably fell 4.2 percent in the year through January, a report to be released on March 14 may show. Strikes have halted output at five mines of Exxaro Resources Ltd. (EXX), the nation’s second-biggest coal producer.
South Africa relies mainly on foreign investment in stocks and bonds to fund the deficit. Foreign portfolio inflows dropped to 12.5 billion rand in the last quarter from 27.5 billion rand in the previous three months, the central bank said.
The current-account shortfall “highlights the very poor savings rate and the continuing need for capital inflows,” Arthur Kamp, chief economist at Cape Town-based Sanlam Investment Management, said by phone. “That’s reflected in a weaker currency.”
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