JOHANNESBURG: South Africa's rand weakened slightly against the US dollar on Tuesday as optimism provided by a narrowing of the current account deficit was overshadowed by signs of foreign capital flight.
South Africa lost 16.8 billion rand ($1.36 billion) in Q4 of 2014 to foreign portfolio outflows, due mainly to a loss of confidence in the local economy and the prospect of rate hikes in the US, central bank data showed.
The Reserve Bank said, however, that rising exports helped shrink the current account deficit to 5.1 percent of gross domestic product in the fourth quarter of last year, from a revised 5.8 percent in the third quarter.
By 1525 GMT the rand softened 0.13 percent to 12.4105 per dollar, losing steam after moving to a session high on the deficit data, which has been a long-standing concern for ratings agencies and investors.
The US Federal Reserve meets on Tuesday to decide on the timing of a possible rate hike, while locally, consumer inflation and retail sales data due on Wednesday may push the rand lower if the figures reveal further obstacles to growth.
Government bonds were slightly firmer, with the benchmark paper due in 2026 shedding 2 basis points to 7.92 percent.
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