South Africa’s rand falls to week lows on wide trade deficit
The latest blow to Africa’s most advanced, but struggling, economy was softened the fuel price drop.
JOHANNESBURG - The rand fell to a week's low against the dollar on Friday, losing ground after the trade deficit widened sharply in October.
The latest blow to Africa's most advanced, but struggling, economy was softened by the energy department announcing that fuel prices would drop from next week because of falling global oil prices.
The trade deficit widened to a record 21.33 billion rand in October, from 3.04 billion rand in September, as exports fell nearly 2 percent while imports soared by 18 percent, the revenue service said.
The rand hit a session low of 11.0675 against the dollar on the news, its weakest since 20 November, according to Thomson Reuters data.
By 1541 GMT the local unit was 0.51 percent softer at 11.0400 compared with Thursday's close.
Government bonds extended the previous day's gains, with the yield for the 2026 benchmark shedding 6.5 basis points to end at 7.61 percent, near the 1-1/2 year low of 7.605 percent touched earlier in the session.
Reserve Bank Deputy Governor Daniel Mminele reiterated on Friday that rand weakness posed upside risks to the inflation outlook, reinforcing expectations that the bank would raise interest rates further next year after 75 basis points of hikes in 2014.