Rand Posts Biggest Weekly Drop in 5 Months on Record Trade Gap

The rand weakened against the dollar, extending its biggest weekly drop in five months, after South Africa posted a record trade deficit.

The currency retreated 0.8 percent to 9.0999 per dollar by 4:49 p.m. in Johannesburg for a weekly decline of 2.7 percent, the most since the five days through Oct. 5. Yields on 10.5 percent bonds due December 2026 rose 9 basis points, or 0.09 percentage point, to 7.39 percent today.

The trade gap reached 24.5 billion rand ($2.7 billion) last month compared with 2.7 billion rand in December, the revenue service said yesterday, more than the 9.7 billion rand median estimate of economists in a Bloomberg survey. Pressure on the current account, the broadest measure of trade in goods and services, is contributing to the rand’s slump to near a four-year low. Gasoline will increase 6.6 percent next week, the Energy Department said in e-mailed statement today.

“This week has been extremely tremulous with yesterday’s data not helping to keep fears allayed,” Brigid Taylor, head of institutional sales at Nedbank Group Ltd. in Johannesburg, said by phone. “The petrol-price increase announced today has just added to those fears.”

South Africa’s government said Feb. 27 it’s considering increasing the tax on gasoline to help pay for an upgrade of refineries to ensure the plants produce cleaner fuel.

Finance Minister Pravin Gordhan cut his forecasts for economic growth for the next three years on Feb. 27 and delayed plans to narrow the budget deficit. He said in an interview the economy can “live with” the rand’s current level.

South Africa’s trade deficit in 2012 was more than six times larger than a year before at 117.7 billion rand as slower global growth and mining strikes curbed exports in Africa’s largest economy.

The “reaction to the trade-deficit number is simply a taste of what’s to come if external demand does not pick up to bolster South Africa’s export performance,” Chris Becker, an analyst at Tradition Analytics, said in a note.

The rand’s three-month implied volatility against the dollar climbed to 13.05 percent, compared with 12.09 percent yesterday.

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