Rand Gains to Three-Week High as Current Account Gap Unchanged
The rand advanced to the strongest level in more than three weeks, erasing an earlier decline, after South Africa’s current account deficit stayed unchanged in the third quarter.
The currency climbed 0.5 percent to 8.7292 a dollar, the strongest since Nov. 12, as of 3:59 p.m. in Johannesburg. The rand gained for a fourth day, rebounding from a 0.2 percent retreat in earlier trading. Yields on benchmark 10.5 percent bonds due December 2026 dropped eight basis points, or 0.08 percentage point, to 7.44 percent, the lowest since Sept. 28.
The gap in the current account, the broadest measure of trade in goods and services, was unchanged at 6.4 percent of gross domestic product, the Reserve Bank said in its Quarterly Bulletin released in Pretoria today. The median estimate of 11 economists surveyed by Bloomberg was for the deficit to reach 6.7 percent of GDP. The central bank cited concern about the shortfall among the reasons for keeping its benchmark repo rate at 5 percent at the past two monetary policy meetings.
“The market expected a significant extension of the current account deficit, so this took most people a bit by surprise,” Mohammed Nalla, head of strategic research at Nedbank Group Ltd. in Johannesburg, said by phone. “That’s why the rand is a few cents stronger” though risks for the currency remain biased toward weakness, he said.
South Africa’s trade gap has widened this year as mining strikes halted production at shafts owned by AngloGold Ashanti Ltd. and Lonmin Plc and imports climbed. An increase in farming and vehicle exports cushioned the impact of the mining strikes last quarter, easing pressure on the current-account shortfall, the central bank said.
The rand held its gains after the European Central Bank kept its benchmark interest rate at a record low to encourage growth. ECB President Mario Draghi maintained the main interest rate at 0.75 percent, as forecast by 56 of 61 economists in a Bloomberg News survey.
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