Rand weakens on current-account data

The rand was softer against major global currencies on Thursday afternoon, as global markets waited for the European Central Bank (ECB) policy meeting.

The ECB is widely expected to retain its dovish stance, and possibly announce stimulus measures to counteract flagging economic growth in the eurozone.

Locally, the Reserve Bank said that SA’s current-account deficit narrowed to 2.2% of GDP in the fourth quarter of 2018, from 3.7% in the third quarter.

A closer look at the data, however, showed that this was due to weak local demand rather than economic strength, said Capital Economics senior emerging markets economist John Ashbourne.

The shortfall was likely to widen throughout the course of 2019, as domestic demand picked up again, said Ashbourne.

At 2pm the rand was 0.43% weaker at R14.3293/$, 0.47% softer at R16.2055/€ and down 0.17% to R18.826/£. The euro was flat at $1.1309.

The R186 government bond was bid at 8.685% from 8.665%.

After the ECB media conference, which begins at 3.30pm South African time, focus is expected to shift to the release of US nonfarm payrolls numbers on Friday.

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Source: businesslive.co.za