Rand Strengthens Most in a Week Before South African Trade Data

The rand strengthened the most in a week against the dollar before the release of data that may show South Africa’s trade deficit narrowed. Bonds fell.

The trade gap in Africa’s largest economy decreased to 9.7 billion rand ($926 million) in November from 12.4 billion rand the previous month, a report by the nation’s tax authority will show at 2 p.m., according to the median estimate of six economists surveyed by Bloomberg. Labor strikes at mines and carmakers cut exports amid a slowdown in foreign portfolio inflows to fund the shortfall in the current account, the broadest measure of trade in goods and services.

Trade “data is extremely volatile and the market never reads too much into a single figure unless its really a huge way away from the expectations,” John Cairns, a currency strategist at FirstRand Ltd.’s Rand Merchant Bank unit said by phone from Johannesburg. “Markets are thin at the moment and a surprise figure could have a larger impact than usual.”

The rand gained 0.7 percent to 10.4559 per dollar by 10:19 a.m. in Johannesburg after weakening as much as 1.8 percent on Dec. 27. The yield on benchmark government bonds due December 2026 rose six basis points, or 0.06 percentage point, to 8.26 percent, the highest on a closing basis in more than a week.

The rand slid 19 percent against the dollar this year as a slump in metal prices and demand for resources from Europe and China compounded South Africa’s labor woes. A selloff in assets from developing markets following the Federal Reserve’s decision to cut bond purchases by $10 billion a month contributed to the currency’s 2.7 percent slide this month, making it the worst performer after the Turkish lira and Argentine peso among 24 major emerging-market peers tracked by Bloomberg.

Foreign investors sold a net 1.9 billion rand of South African bonds this month to Dec. 27, 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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