Rand firms a bit in choppy trade, despite disappointing data

The rand was slightly firmer against major global currencies on Thursday afternoon, despite disappointing local data and another sign that global central banks were growing hawkish.

Earlier, the deficit in the current account, which gauges SA’s trade with the rest of the world, widened to 4.8% of GDP in the three months to March, from 2.9% in the preceding quarter. The Bloomberg consensus was for a deficit of 3.9%.

This was the largest deficit in more than two years and helped explain why the local currency had been so vulnerable to global shifts in sentiment, said Capital Economics analysts.

The local unit was fairly flat against the pound, however, which was given a boost after the Bank of England opted to keep interest rates on hold, but with a hawkish tone. The accompanying statement suggested the prospect of an increase in August, Oanda analyst Craig Erlam said.

The euro, meanwhile, remained under strain following the appointment of two eurosceptic Italian politicians to key finance portfolios. It has, however, found some support in the past couple of hours, from hawkish commentary from European Central Bank officials.

Issues of global trade conflict continue to linger, as does the forthcoming election in Turkey at the weekend.

An continuing meeting between oil cartel Opec and Russia is also being watched by the market, with speculation that parties were close to agreement, owing to a rise in production. The price of Brent crude was $73.50 a barrel in afternoon trade.

Any spike in oil prices, which are under pressure due to US sanctions on Iran and Venezuela, could help force an early interest-rate increase in SA due to the inflationary effect of higher fuel prices.

Local bonds were slightly better bid, with the benchmark R186 yielding 8.955% from 9% on Wednesday, while the R207 was at 7.615% from 7.655%.

At 3pm, the rand was at R13.5839 to the dollar from R13.6562, R15.7532 to the euro from R15.8077, and R17.9986 to the pound from R17.9895. The euro was at $1.1598 from $1.1576.