JOHANNESBURG: South Africa's rand fell to a month-low against the dollar on Monday as the currency continued to struggle in the face of a wider-than-expected trade deficit and a crippling, five-month strike in the platinum sector.
The rand was trading at 10.569 to the dollar at 0702 GMT, after earlier dropping to a session low of 10.619, its weakest since the end of April.
The sell-off followed South African Revenue Services figures on Friday that showed the trade deficit had widened to 13.03 billion rand ($1.3 billion) in April from 11.39 billion rand in March. Other data also indicated that private sector credit demand had slackened to 8.27 percent year-on-year in April from a revised 8.73 percent in March, reflecting an overall weakness in emerging markets.
Analysts said the last four trading sessions had broken the strengthening trend the currency has enjoyed since the end of January.
"Technically, the rand has broken out of the well-documented corrective down-channel," said Standard Bank dealer Warrick Butler. "There is scope now for more weakness toward the next area of importance which is at 10.84/85."
The strike at the world's top three platinum producers is already the longest in South Africa's history, and dragged Africa's most advanced economy into a contraction in the first quarter, the first dip in output since a 2009 recession.
Government bonds were unmoved, with the yield on the benchmark 2015 paper and the longer-dated 2026 paper steady at 6.7 percent and 8.3 respectively.
Comments
Comments are closed for this article.