* Rand under pressure from trade deficit
* Last-minute inflows support bond market
JOHANNESBURG, Sept 28 (Reuters) – South Africa’s rand
weakened against the dollar on Friday, weighed down by a
wider-than-expected trade deficit figure and a subdued sentiment
towards riskier assets, although it found some support from
late-session bond buying.
South Africa’s trade deficit widened to 12.2 billion rand
($1.49 billion) in August after a 6.7 billion rand shortfall in
July, putting pressure on the currency.
The rand was 0.22 percent weaker at 8.268 against
the dollar at 1453 GMT, from last night’s close of 8.2520.
However, it reversed some losses from earlier in the
session, boosted by bond inflows ahead of South Africa’s
inclusion in Citi’s World Government Bond Index on Monday.
“The ongoing deterioration in the trade balance will add to
the pressure on the current deficit, which has already widened
to a deficit of 6.4 percent of GDP in Q2 2012,” said Kevin
Lings, an economist at Stanlib.
“This all suggests that the rand exchange rate is increasing
at risk of weakening.” Lings added.
The currency was also under pressure before the trade data
as Moody’s cut its rating on South African debt to Baa1 from A3
on Thursday, citing worries about the government’s institutional
strength, investment climate and political stability.
Continued…
