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The rand weakens slightly in anticipation of trade data out later today

by , 28 November 2014

The rand was trading slightly weaker against the dollar this morning. Traders are waiting for the release of South African trade data that comes out later today.

Expectations are that the trade deficit will have increased markedly from September to October.

Let's take a closer look at what's going on…

The rand weakens but not as much as some of its emerging market counterparts

The rand ebbed slightly this morning against the dollar, reports Fin24. But the local currency “outperformed oil-linked developing currencies that suffered as the price of Brent crude sank to a four-year low”.

The oil price took a tumble yesterday following the outcome of the OPEC meeting. OPEC represents around a third of the world’s oil-producing nations. Despite oversupply of oil, OPEC revealed yesterday that it had no plans to cut production.

Lower oil prices have helped curb rising inflation in South Africa, notes IOL. Yesterday, producer inflation came out at its lowest level since December last year.

Economists at EM Analytics said that the falling oil price “is a positive” for emerging markets that import much of their oil, like South Africa, adds Fin24.

How the rand could react to trade balance data

Analysts at Barclays Research say the rand could weaken more if the trade balance reading comes out much worse than expected, says BDLive. After trading for a couple of day below R11 to the dollar, the rand is again back above that key level.

A survey of economists conducted by BDLive forecasts the trade deficit to come in at R6 billion for last month. That is much larger than the R2.9 billion recorded for September.

A survey of economists conducted by Reuters puts the trade deficit at R7.1 billion, says IOL.

At time of writing, the rand was trading at 11.04 to the dollar, 13.73 to the euro and 17.32 to the pound.

We’ll find out later this afternoon the trade deficit for October and the effect this will have on the rand.

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The rand weakens slightly in anticipation of trade data out later today
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