JOHANNESBURG: The rand traded flat on Wednesday, remaining on track to end 2014 on the backfoot in a year where it has lost over 10 percent in value against a resurgent greenback as Africa's most advanced economy failed to shake fundamental weaknesses.
By 1020 GMT the local unit had slipped 0.03 percent to 11.5700 per dollar, reversing gains achieved in the previous session after the country's trade deficit narrowed sharply.
November's trade gap contracted to 5.7 billion rand, following a 21.63 billion rand shortfall in October that pushed the rand close to six-year lows.
"SARB interest rates have remained too low to effectively cap off import growth at a time when export growth is suffering," ETM Analytics said in a year-end note.
"[This is] not only due to weak external demand in key export regions but also the productivity losses associated with load shedding (power cuts), strikes and onerous government policy."
The SARB, South Africa's central bank, kept lending rates at 5.75 percent at its last meeting and is expected to do the same in February.
South Africa's economy shrank in the first quarter of the year, for the first time since 2009, while growth in Q2 and Q3 failed to breach the 2 percent mark.
Labour disruptions, chronic power cuts and yawning budget and current account deficits put off investors already spooked by a growing aversion to riskier assets.
The rand, along with emerging market peers, is expected to remain under pressure in the new year due to expectations the U.S. Federal Reserve will hike interest rates and a cooling growth outlook for China.
Yields on government bonds fell, with the benchmark issue due in 2026 shedding 5.5 basis points to 7.96 percent.
Earlier, South Africa's central bank said November credit growth had quickened to 9.13 percent year-on-year, while money supply also expanded to 8.31 percent.
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