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Rand Falls 1st Day in 3 as China Slowdown Dims Export Prospects

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July 1 (Bloomberg) -- The rand declined for the first time in three days as evidence of an economic slowdown in China, South Africa’s biggest trading partner, dimmed export prospects.

Two gauges of China’s manufacturing fell in June, underscoring a sustained slowdown in the world’s second-biggest economy as policy makers seek to rein in financial speculation and real-estate prices. China is the biggest buyer of South African raw materials. South Africa’s trade gap widened to 70 billion rand ($7.05 billion) in the first half of 2013 compared with 51 billion rand last year, a report on June 28 showed.

“Persistently large trade deficits, together with the recent increase in the volatility of portfolio transactions. will heighten concerns about financing the current account deficit,” Mohammed Nalla, head of strategic research at Nedbank Group Ltd. in Johannesburg, said in e-mailed comments. “This could exert further downward pressure on the rand.”

South Africa’s currency weakened 0.3 percent to 9.9089 per dollar as of 4:03 p.m. in Johannesburg. Yields on benchmark 10.5 percent bonds due December 2026 dropped one basis point, or 0.01 percentage point, to 7.90 percent.

An official Purchasing Managers’ Index for China declined to 50.1, the lowest level in four months, from 50.8, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing. A private PMI from HSBC Holdings Plc and Markit Economics was 48.2, the weakest since September. Readings above 50 signal expansion.

South Africa’s purchasing managers’ index climbed in June to the highest level since February.

To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net

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

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