Rand falls as current account deficit widens
Fear of a global slowdown will affect SA’s momentum, say analysts
The current account deficit widened marginally to 3.5% of GDP in the third quarter from 3.4% previously, mainly due to the smaller trade surplus, data from the Reserve Bank showed on Thursday. The current account is indicative of SA’s trade with the rest of the world. Compared to recent years, the deficit has narrowed significantly after averaging more than 5% of GDP between 2012 and 2015. “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,” said ETM Analytics market analyst Halen Bothma. On Thursday, the rand slid more than 2% to cross R14 to the dollar for the first time in about two weeks. “This is likely related to other issues,” said BNP Paribas economist Jeff Schultz, citing the risk centre of emerging markets, trade tension and the “idiosyncratic risks” posed by Eskom.
“The current account would have been just one of many reasons...