* Rand rallies after data shows narrower deficit
* Bonds edge lower but foreign interest remains
JOHANNESBURG, March 19 (Reuters) – South Africa’s rand edged
firmer against the dollar on Monday after central bank data
showed the current account deficit unexpectedly narrowed in the
fourth quarter of last year, and in line with a stronger euro.
By 1640 GMT the rand was up 0.62 percent at 7.5250
against the dollar compared with Friday’s close at 7.5720.
The rand rallied from around 7.5715 just before a Reserve
Bank report showed the current account deficit narrowed to 3.6
percent of gross domestic product in the fourth quarter of 2011
from a revised 4.1 percent in the third quarter.
“The narrower current account deficit is rand-positive from
a balance of payments perspective,” Standard Bank said in a
note.
The Reserve Bank said the deficit on the account was well
covered by portfolio inflows from foreign accounts, which have
helped push the currency up more than 6 percent so far this
year, placing it sixth in a basket of 20 emerging market
currencies monitored by Reuters.
On Monday, Reserve Bank chief economist Monde Mnyande said
the recent gains in the rand would likely have a moderating
effect on the trajectory for underlying inflation in South
Africa in the medium term.
Government bonds were slightly weaker on Monday although
yields were off last week’s 2-1/2 month highs, with traders
seeing continued offshore interest in the local debt market.
Continued…
