Rand loses ground as country records R2.9bn trade deficit in September

THE RAND fell more than 1 percent yesterday after the country’s trade balance unexpectedly swung into a deficit in September on the back of an imbalance with South Africa’s third biggest biggest trading partner, China.

The South African Revenue Service (Sars) yesterday said the trade balance showed a R2.9 billion deficit in September from a R8.7bn surplus in August.

The market consensus was a R4bn surplus.

The news sent the rand into retreat, weakening to R14.84 from the day’s high of R14.61.

By 5.28pm, the rand was at R14.81 to the greenback.

Head of currency strategy and market research at FXTM, Jameel Ahmad, said the data underlined the country’s bleak growth outlook and the impact of the current trade spat between the US and China on its exports.

“The market is not pleased with the news that export growth fell by 2.6 percent month-on-month, with the essential thing to consider that slowing export growth at a time where the domestic economy is in a technical recession is never a positive sign for any global economy,” Ahmad said.

The data showed that imports surged 8 percent from August to September to R116.6bn, supported by higher purchases of mineral products and machinery and electronics in the period.

Exports on the other hand decreased by 2.6 percent to R113.69bn on lower sales of vegetable products, machinery and electronics.

Sars said the country’s trade balance had seen a significant plunge on a yearly basis. “The year-to-date (January 1 to September 30, 2018) trade deficit of R0.33bn is a deterioration on the surplus for the comparable period in 2017 of R44.89bn,” Sars said.

China was South Africa’s most important partner, accounting for 17.7 percent of total imports, while Saudi Arabia accounted for 9.2 percent and the US 6.2 percent.

South Africa’s main export partner in the period was Germany which took a 9.1 percent share of total exports, while China accounted for 7.2 percent and the US 6.8 percent.

President Cyril Ramaphosa in September told the Forum on China-Africa Co-operation that work was needed to be done to balance the structure of trade between Africa and China.

Investec economist Lara Hodes said imports rose 11.5 percent year-on-year during the period to R909bn.

She said this was marginally outpacing the 5.6 percent year-on-year exports lift to R908.7bn.

“An analysis of the underlying trade data indicates that only one of the main export categories, namely precious metals and stones, increased, moderately at that, rising by 4 percent month-on-month,” Hodes said.

South Africa exported R34.9bn worth of goods to Asia in September, while it imported R54.6bn, thus recording a trade deficit of R19.7bn.

The country slashed its trade deficit with Europe from the R4.1bn deficit recorded in August to just R145 million in September, while it registered a R1.9bn deficit with America.