JOHANNESBURG: South Africa's rand continued a downward spiral against the dollar on Tuesday, tumbling to fresh eight-month lows after the revenue service reported a sharp widening of the trade deficit.
The trade account recorded a 16.3 billion rand ($1.44 billion) shortfall in August, its biggest gap in seven months.
The poor trade data compounds South Africa's economic problems brought about by expected policy normalisation in the United States. South Africa's wide current account deficit, fed by a gaping trade deficit, puts the rand at the forefront of the emerging market sell-off.
"Alongside still-weak growth data and an exposed rand, this will serve as a reminder of the ongoing vulnerability of South Africa to changes in external financing conditions, because of the size of its current account deficit," said Razia Khan, head of Africa research at Standard Chartered Bank.
The rand fell to 11.3490 after the trade data, its weakest since Jan. 30. It was extending losses that have seen it test weaker levels every day for the past four sessions. At 1529 GMT, it had come back slightly to 11.3070/dollar.
In a hawkish statement on Tuesday, South African Reserve Bank Deputy Governor Lesetja Kganyago said the central bank had little room to boost demand in the economy and should focus on inflation.
Yields on government bonds climbed 4 basis points to 8.365 percent on the benchmark 2026 issue.
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