South Africa’s rand fell through a series of record lows against the dollar on Monday, knocked back largely by a widening trade deficit and a gloomy review by the central bank, while stocks were flat.
The rand tumbled after the revenue agency reported a wider-than-expected trade deficit in October, while comments by the South African Reserve Bank citing the weaker currency as a key contributor to inflation as well as a major risk to the CPI forecast also weighed.
By 1652 GMT the currency traded at 14.4850 to the greenback, down 0.57 percent from Friday’s close.
Domestic budget deficit data, which showed a narrower deficit of 26.548 billion rand in October, compared with a 29.296 billion rand for the same month in 2014/15 had earlier offered some temporary relief.
Lower commodity prices due to weaker demand from China, the largest importer of commodities, and drought are putting pressure on exports from Africa’s most industrialised economy.
“There is still little to suggest that the weaker rand is having the desired effect of stimulating domestic exports,” BNP Paribas securities South Africa economist Jeffrey Schultz said.
“A suppressed domestic demand outlook should help to keep a lid on South Africa’s import growth over the medium-term in spite of the fact that the currency looks likely to remain at historically weak levels,” Schultz said.
Get the rest of the article from Reuters
