Rand softer despite trade deficitComment on this story
Johannesburg - South Africa's rand fell by over half a percent against the dollar on Thursday, failing to gain momentum from a surprise narrowing of the country's trade deficit.
Domestic trade data showed the deficit had shrunk to 190 million rand ($18 million) in June from 7.44 billion rand in May, beating forecasts of a 6.3 billion rand shortfall by economists polled by Reuters.
The local unit shed 0.51 percent to 10.7135 per dollar by 16:56 SA time, falling from the previous session's close of 10.66 and touching two-week lows before pulling back slightly.
“The effect of trade data on the rand has been fickle to interpret because it has been out of place with consensus,” said Sean McCaltan, an economist at ETM Analytics.
“There hasn't been the reaction you would normally see to that kind of data, in fact it looks like we have reverted back to the US data regarding direction.”
The dollar hit session highs against most currencies after the Fed announced another $10 bln taper to its asset purchase program on Wednesday, while GDP numbers showed the world's largest economy to be growing at 4 percent.
Diminished capital in-flows are expected to hurt the local economy as global monetary conditions become less accommodative.
“The rand tends to out-perform in good times and under-perform in bad times. The dollar recovery could be a sore point,” McCaltan said.
Earlier, Statistics South Africa said producer price inflation for June had slowed to 8.1 percent from 8.7 percent in May.
Bonds were slightly weaker, with yields on both benchmark papers higher, by 1.5 basis points on the 2015 bond and 2 basis points on the 2026 paper. - Reuters