Cape Town- The rand weakened for a third day before the release of data that may show South Africa’s current-account shortfall widened.
Bond yields jumped the most in more than a week.
The deficit on the current account increased to 6.9 percent of gross domestic product in the first quarter from 6.5 percent in the previous three months, a report may show tomorrow, according to the median estimate of 15 economists in a Bloomberg survey.
A widening gap requires more foreign investment to pay for imports, flows which have slowed since the beginning of May on speculation the Federal Reserve may taper monetary easing.
“A bigger-than-expected number would clearly rattle” the rand “given the fears over a slowdown of flows to emerging markets,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e-mailed comments.
South Africa’s currency weakened 0.4 percent to 10.0140 per dollar as of 10:19 a.m. in Johannesburg.
Yields on benchmark 10.5 percent bonds due December 2026 climbed 17 basis points, or 0.17 percentage point, to 7.95 percent, the biggest one-day increase since June 10.
Federal Reserve policy makers start a two-day meeting today amid speculation the Fed is poised to reduce bond purchases which have fueled demand for emerging-market debt.
Foreign investors sold a net 928 million rand ($93 million) of South African bonds last week, according to the JSE Ltd.
Yesterday was a public holiday in South Africa. - Bloomberg News