Rand near three-week lows

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NewRandMoney

Reuters.

Johannesburg - South Africa's rand was trading near three-week lows on Wednesday as a wider-than-expected current account deficit hit investor confidence in Africa's biggest economy.

The rand was at 10.3780 to the dollar at 08:14 SA time, nearly 0.5 percent weaker than Tuesday's New York close.

South Africa's current account deficit widened in the third quarter to 6.8 percent of GDP, its biggest in five years, from a revised 5.9 percent in the second quarter, the South African Reserve Bank said on Tuesday.

Economists polled by Reuters had forecast a current account gap of 6.2 percent.

“The current account is a real concern. At 6.8 percent of GDP in 3Q13, the deficit is the worst since the crisis,” Rand Merchant Bank's John Cairns wrote in a note.

“This is despite more than two years of continuous rand weakness that should have generated a correction... How the large deficits will be funded remains the rand's - and therefore South Africa's - key question.”

Cairns said the next resistance level on the dollar/rand is 10.42, with support at 10.33.

Government bonds were softer, with the yield on the 2026 issue and on the 2015 paper each 3.5 basis points higher at 8.425 percent and 6.275 percent respectively. - Reuters


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