Rand slips past R14/$ as current-account deficit worsens

The rand slid nearly 2% to cross R14 to the dollar for the first time in about two weeks on Thursday, after SA’s current-account data deteriorated slightly in the third quarter.

The current-account deficit widened to 3.5% of GDP in the third quarter, from 3.4% in the second quarter, Reserve Bank data showed. 

“What these numbers tell us is that SA’s vulnerability to external factors has increased, though not significantly. We are still relying more on external sources of funding to balance our books,” ETM Analytics market analyst Halen Bothma said.

Markets were also edgy after the arrest of Chinese tech company Huawei’s CFO, Meng Wanzhou, in Canada. The move stoked tension between the US and China as Meng is reportedly facing extradition for allegedly violating sanctions against Iran. The move could scupper the trade truce the US and China reached last weekend.

The rand and other emerging-market currencies, including the lira and Indonesian rupiah, were caught in the fallout. The rand is widely regarded as a proxy for emerging markets.

Investors also kept tabs on the oil markets as oil cartel Opec’s summit got under way in Vienna. Brent crude slid 4.39% to $58.99 a barrel in early afternoon trade, amid reports that major oil producers were struggling to reach a deal to reduce output.

The fall in oil prices will improve the outlook on local inflation, which accelerated to an annual rate of 5.1% in October, from 4.9% in September.

At 2.18pm, the rand had lost 1.57%/$ at R14.062, 1.55%/€ to R15.9513 and 1.67%/£ to R17.9278. The euro was flat at $1.1343.