Rand Heads for Worst Half Since 2011 as South Africa Yields Fall

The rand swung between gains and losses, heading for its worst six-month decline against the dollar since the second-half of 2011, before a report that will probably show South Africa’s trade deficit narrowed last month.

The shortfall eased to 12 billion rand ($1.2 billion) in May from 15 billion rand, according to the median estimate of 11 economists surveyed by Bloomberg. The currency has weakened amid concern that mining labor unrest may disrupt exports. Metals account for more than 50 percent of export earnings for South Africa, which has the world’s largest known platinum and chrome reserves and is the fifth-largest producer of gold.

“Event risk today comes mostly from the local May trade data,” John Cairns, a currency strategist at FirstRand Ltd. (FSR)’s Rand Merchant Bank, said in an e-mailed note to clients. “The extreme sensitivity of the market to these figures that was seen at the end of 2012 and in early 2013 has probably subsided somewhat. But we should still worry about some response.”

The rand was 0.2 percent weaker at 9.9673 per dollar as of 9:39 a.m. in Johannesburg after earlier appreciating as much as 0.3 percent. The currency has dropped 15 percent this year, the worst performer most among 24 emerging-market currencies tracked by Bloomberg.

Yields on 10.5 percent government debt due December 2026 fell for a fourth day, declining 12 basis points, or 0.12 percentage point, to 7.80 percent, paring this month’s increase to 20 basis points. Foreigners bought a net 1.1 billion rand in local bonds yesterday, according to data from the Johannesburg Stock Exchange.

To contact the reporter on this story: Jaco Visser in Johannesburg at avisser3@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

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