Rand weakens after local current account data

The rand was weaker against the dollar at midday on Tuesday after the release of local current account data.

SA’s current account deficit widened as expected to 4.1% of gross domestic product (GDP) in the third quarter from 3.1% in the second quarter‚ the Reserve Bank’s quarterly bulletin showed on Tuesday.

SA imported more than it exported and also paid more dividends to international investors for their investments in SA than it received for its investments in the rest of the world‚ resulting in the current account shortfall widening.

At 11.30am‚ the rand was at R14.5848 against the dollar from a previous close of R14.5178.

Against the euro the rand was at R15.8385 from R15.7353 and at R21.9093 against the pound from R21.8630.

The euro was at $1.0859 from a previous close of $1.0837.

Meanwhile‚ oil is tanking and with it commodities and currencies related to it.

Brent crude has hit a six-year low thanks to oil cartel Organisation of the Petroleum Exporting Countries (Opec) seemingly abandoning its target and dropping its founding mission to manage the oil market as production was not cut at Friday’s meeting.

TreasuryOne chief currency dealer Wichard Cilliers said it was "scary" to think that Brent crude was trading at $115 18 months ago‚ and has lost 65% of its value since then.

The most prominent member of Opec is Saudi Arabia‚ who is refusing to stifle production in an attempt to kill off the threat of the US shale industry.

Mr Cilliers said the slump in oil prices should be a positive for consumers as it puts a damper on inflation and drops the fuel price‚ but that it did not necessarily mean prices in SA would fall with the rand at its worst levels.

The rand peaked at R14.56 to the dollar on Monday‚ but was not the only commodity currency to be drilled. The Aussie lost 1.55%‚ the Canadian dollar was down 1.16%‚ and the Russian ruble 1.93% weaker against the greenback.

Commodities woes did not stop at oil‚ as iron ore slumped to below $40 and copper was trading $2 above its lowest level in six years‚ Mr Cilliers said.

- TMG Digital/BDlive