Rand slumps as tap gap widens

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Cape Town - The rand slumped to an almost three-week low and South African bond yields rose to the highest level since September 5 as the nation’s current-account deficit widened more than estimated.

The shortfall was 6.8 percent of gross domestic product in the three months through September, the Reserve Bank said today, compared with a median estimate of 6 percent in a Bloomberg survey of 11 economists.

The second quarter gap was revised to 5.9 percent from 6.5 percent.

“South Africa continues to run sizable current-account deficits,” Adenaan Hardien, chief economist at Cape Town-based Cadiz Asset Management, said in an e-mailed note.

“Current account fundability will remain a key risk.”

The rand slid for a second day, dropping as much as 0.5 percent after the data was announced and trading 0.1 lower at 10.2872 per dollar as of 10:43 a.m. in Johannesburg, the lowest since November 14 on an intraday basis.

Yields on benchmark bonds due December 2026 climbed two basis points, or 0.02 percentage point, to 8.44 percent.

Employers in the US boosted jobs last month by the most since June, a report tomorrow may show after data yesterday showed manufacturing unexpectedly accelerated in November at the fastest pace since April 2011.

ADP Research Institute will probably say companies added 170,000 positions in November, which would be the most in five months, according to the median estimate of 40 analysts surveyed by Bloomberg.

“Strong US data has revived tapering fears,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in an e-mail.

The rand weakened 0.5 percent against the euro to 13.9842, heading for the worst closing level since December 2008.

Foreign investors sold a net 529 million rand ($51 million) of South African bonds yesterday, a ninth straight day of outflows, according to JSE Ltd. data.

Investors also sold a net 265 million rand of equities, bringing capital outflows since the beginning of November to 32.6 billion rand. - Bloomberg News

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