S. African Rand Posts Second Monthly Decline as Trade Gap Widens

The rand gained, paring its second monthly decline against the dollar, after South Africa posted a trade deficit in October that was lower than economists’ expectations. Bonds gained.

The shortfall widened to 12.4 billion rand ($1.2 billion) last month from a revised 11.9 billion rand in September, the South African Revenue Service said today. The median estimate of 11 economists in a Bloomberg survey was for a gap of 13.5 billion rand. While beating projections, the deficit is adding to the current-account shortfall, putting pressure on the rand amid the worst foreign-investor selloff of South African stocks and bonds in more than two years.

“Large trade deficits remain a feature and this is bound to keep the rand particularly vulnerable relative to its emerging-market peers,” Jana le Roux, a Johannesburg-based analyst at ETM Analytics, said in an e-mail. “While downside growth risks remain, the Reserve Bank will maintain a cautious stance on inflation and rates are expected to remain unchanged in the foreseeable future.”

The rand appreciated 0.3 percent to 10.1686 per dollar as of 4:50 p.m. in Johannesburg, with the decline this month at 1.3 percent. Yields on benchmark bonds due December 2026 dropped two basis points, or 0.02 percentage point, to 8.32 percent, paring the yield increase this month to 27 basis points.

Foreign investors sold a net 500 million rand of South African bonds and 691 million rand of stocks yesterday, bringing capital outflows this month to 31.6 billion rand, the most in a month since September 2011.

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