Rand falls on negative trade data, JSE gains

File Image: IOL

CAPE TOWN – The rand weakened against the dollar yesterday after the country’s trade balance for the year so far swung to a deficit compared with a surplus last year, pointing to the fragility of the economic rebound.

At 5pm, the rand bid at R12.6637 to the dollar, 9.79cents softer than at the same time on Wednesday.

South Africa’s revenue agency said the trade balance for January to April was a deficit of R17.65 billion compared with a surplus of R8.52bn for the comparable period in 2017.

The data ignited concerns that the economic growth outlook remained uncertain despite an uptick in sentiment.

“Net trade has been quite disappointing thus far in 2018 and will likely be a drag on first-quarter GDP (gross domestic product),” said Elize Kruger, an economist at NKC African Economics.

“We forecast a wider current account deficit of 2.8percent of GDP for 2018 compared to deficit of 2.3% of GDP in 2017.”

First-quarter GDP numbers are due for release on Tuesday. The economy expanded 3.1percent in the last quarter of 2017.

In fixed income, the yield for the benchmark government bond due in 2026 rose 1.5 basis points to 8.555%, reflecting weaker prices.

Stocks rose, supported by technical factors after momentum indicators showed the market was near oversold levels. Shares were given a further shot by a global equities rally spurred by Chinese data and renewed efforts in Italy to form a government.

The benchmark JSE Top40 index added 1.01percent to 49783.92 points while the wider all share index climbed 1percent to 56157.89 points.

Precious metals producer Sibanye-Stillwater added over 2% in the session after it said it was exploring debt-cutting options while ruling out tapping shareholders for funds. But at the market close, it slipped into the red to end 0.13percent lower at R7.89.

Meanwhile, equity indices on Wall Street and around the world fell yesterday as trade concerns weighed on investors, taking the pep out of a recovery in many markets earlier in the day.

Washington was set to announce plans to slap tariffs on EU steel and aluminum imports as early as this morning, according to sources.

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Source: iol.co.za