Trade deficit sends rand into tailspin
File image: IOL
CAPE TOWN – The rand was flat in early trade on Wednesday with the market keeping a sharp eye on South African trade balance data and US data releases particularly focused on wage growth.
Corporate treasury manager at Peregrine Treasury Solutions, Bianca Botes, said the weak labour figures, indicating that 27.5 percent of the South African workforce was unemployed, did little to move the rand as all eyes remained squarely focused on the US-China trade war dynamic.
The rand later took a knock from news of the country’s trade balance deficit being at R3 billion in September – from an R8.77bn surplus in August – compared with market expectations of a surplus of R3.9bn.
At 5pm the domestic currency was bid 21c weaker than Tuesday’s same time bid at R14.81 to the greenback. Against the pound the rand was 31 softer at R18.90 and to the euro the currency eased 17 to R16.76.
Investec’s Lara Hodes said the projected moderation in global trade, together with a rise in the value of imports, as the weaker rand exchange rate continued to intensify pricing pressures from imports could precipitate a moderate weakening of the trade balance going forward.
Meanwhile markets sharply diverged, with stocks making hefty gains tracking a global rally at the end of a volatile month, led by Naspers, according to Reuters data. The blue-chip top 40 index added 3.61 percent to 46 141.22 points, while the broader all share rallied 3.22 percent to 52 389.87 points.
BUSINESS REPORT ONLINE
Source: iol.co.za