Johannesburg - The rand weakened against the dollar to pare its second month of gains as South Africa posted a trade deficit that was wider than economists estimated.
Africa’s biggest economy posted a trade gap of 18.9 billion rand ($1.9 billion) in September as strikes curbed car and mining exports and oil imports increased.
The shortfall compares with an August deficit of 19.1 billion rand, the Pretoria-based South African Revenue Service said in an e-mailed statement today.
The median estimate of 12 economists in a Bloomberg survey was a 16.4 billion rand deficit.
“It’s not great news, our exports obviously are still suffering from the labour actions that we’ve seen in the last couple of months,” Ion De Vleeschauwer, chief dealer at Bidvest Bank in Johannesburg, said by phone today.
“It can’t be good for the currency.”
The rand fell for a fifth day, down 0.3 percent to 9.9790 per dollar as of 2:22 p.m. in Johannesburg, reducing gains in October to 0.5 percent.
Yields on benchmark bonds due December 2026 climbed six basis points, or 0.06 percentage point, to 7.97 percent, unchanged from September 30.
The Federal Reserve’s Open Market Committee maintained its $85 billion in monthly bond purchases yesterday while removing a sentence from its previous policy statement saying tighter financial conditions could slow an improvement in the economy.
“The risk of a Fed taper at the December FOMC meeting remains a possibility,” Theuns de Wet and Mamello Matikinca, Johannesburg-based strategists at Rand Merchant Bank, wrote in a client note.
“The mere possibility of such a scenario has hit global risk appetite.”
Producer-price inflation was unchanged at 6.7 percent in September, Pretoria-based Statistics South Africa said in a statement on its website. The median estimate of 12 economists in a Bloomberg survey was 6.8 percent.
“Producer inflation is likely to remain elevated in the months ahead,” Nedbank Group Ltd. economists led by Dennis Dykes said in a e-mailed note, predicting that the Reserve Bank will keep interest rates unchanged into next year.
“The major risk to the outlook remains the rand, which has bounced back from recent lows, but remains volatile.” - Bloomberg News