The rand weakened for the first time in five days, retreating from a four-week high, after South Africa’s current-account gap widened more than expected.
The deficit reached 6.5 percent of gross domestic product in the second quarter from 5.8 percent in the first three months of the year, the Reserve Bank said in its quarterly bulletin, released today in the capital, Pretoria. The median estimate of 15 economists surveyed by Bloomberg was 6.2 percent.
“The sizable financing requirements of the current account deficit will continue to add to the risk factors that are already pulling the rand weaker,” Gina Schoeman, Johannesburg-based South Africa economist at Citigroup Inc., said in an e-mailed note.
South African exports have come under pressure amid a slump in demand from Europe and strikes in the nation’s mining industry that disrupted output and undermined growth in the continent’s biggest economy. That’s contributed to the rand’s 15 percent plunge against the dollar this year, the most among 24 emerging-market currencies tracked by Bloomberg.
The rand dropped 0.8 percent to 10.0355 per dollar by 3:13 p.m. in Johannesburg, the most since Aug. 28 on an intraday basis. Yields on 10.5 percent bonds due December 2026 rose four basis points, or 0.04 percentage point, to 8.33 percent today. It may further ease to 10.60 per dollar by the end of the year, Schoeman said.
“While a weaker currency typically helps narrow a current account deficit, we believe this will take quite a bit longer than usual given local production disruptions and lower global demand,” Schoeman said.
The average dollar price of South Africa’s non-gold-mining export commodities fell 8.7 percent in the three months through June, compared with an 8 percent gain in the first quarter, according to the central bank. Weaker demand from emerging-market economies, such as China, put pressure on prices, the bank said.
South Africa has the world’s largest-known reserves of platinum, used in the making of automobiles, and chrome and is the fifth-largest producer of gold. Metals contribute to at least 50 percent of the country’s exports, according to the government.