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South Africa June Trade Gap Narrows as Oil Imports Drop

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July 31 (Bloomberg) -- South Africa’s trade deficit narrowed to 190 million rand ($18 million) in June as vehicle exports soared and imports of oil decreased.

The deficit narrowed from a revised 7.4 billion rand in May, the Pretoria-based South African Revenue Service said in an e-mailed statement today. The median estimate of 13 economists surveyed by Bloomberg was for a shortfall of 6.3 billion rand.

An improvement in the trade gap helps to support the current account, which posted a deficit of 4.5 percent of gross domestic product in the first quarter. The rand weakened 1.4 percent against the dollar in the first six months of the year, improving the competitiveness of exports even as a strike at platinum mines halted production. A more recent stoppage by more than 220,000 metalworkers lasted almost a month before employees started returning to work this week.

“Any positive currency reaction due to the narrow deficit will be short-lived,” Christie Viljoen, an economist at NKC Independent Economists, said by phone from Paarl outside Cape Town. “Exports would have worsened again in July due to the strike in the metals industry which disrupted vehicle manufacturing.”

The rand lost 0.7 percent and traded at 10.7270 as of 3 p.m. in Johannesburg. The yield on rand-denominated government bonds due December 2026 rose 2 basis points to 8.3 percent.

Exports rose 3.7 percent to 80.3 billion rand in June as shipments of vehicles surged 42 percent. Imports shrank 5.1 percent to 80.5 billion rand, led by mineral products including oil, which dropped 27 percent.

The monthly trade figures are often volatile, reflecting the timing of shipments of commodities such as oil and diamonds.

To contact the reporter on this story: Rene Vollgraaff in Johannesburg at rvollgraaff@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net Ben Holland, Karl Maier

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