adminJOHANNESBURG — South Africa’s rand weakened for the second straight day against the dollar on Friday, hitting a session trough after data from the revenue service showed a trade deficit for April, the latest sign of a struggling economy.
The local unit was within easy reach of five-week lows hit this week after Statistics South Africa said GDP growth expanded by only 1.3 percent in the first quarter while the jobless rate worsened.
The rand fell to 12.1850 versus the greenback on Friday from Thursday’s close of 12.1300, after trade numbers showed South Africa recorded a wider deficit of 2,51 billion rand in April from a 9 million rand gap in March.
Chronic trade deficits point to continued pressure on the current account, which together with persistent budget deficits make the rand particularly vulnerable whenever investors shun riskier emerging markets.
NKC analyst Bart Stemmet said while mining output was set to improve significantly this year compared to strike-ridden 2014, deflated commodity prices due to slack demand from China would negate this potentially positive influence on the trade balance.
“On the other hand, rising international oil prices heading into the winter months will exert pressure on the trade account and likely keep the rand on the back foot,” Stemmet added in a market note.
In fixed income, the yield for the benchmark instrument due in 2026 eased 1.5 basis points to 8,165 percent. — Reuters
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