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Current account deficit narrows

Pretoria - The shortfall on South Africa's current account narrowed to its smallest in over two years in the first quarter of 2014 as lower dividend payments to offshore investors offset a deterioration in the trade balance, the South African Reserve Bank (Sarb) said on Wednesday.

The deficit was at 4.5% on GDP in the first three months of the year, Sarb said, compared with a 5.1% gap in the fourth quarter and against market expectations for a 6.1% shortfall.

A smaller deficit on the services, income and current transfer account had "more than neutralised" the deterioration in the trade balance, rent account of the balance of payments," Sarb said in its quarterly bulletin.

In rand terms, the shortfall amounted to R161bn, compared with R179bn in Q4.

The trade balance was hit by an increase of 4.4% in imports, mainly driven by crude oil, while a five-month platinum strike was partly responsible for lacklustre growth of 2.1% in the volume of exports in the first quarter.

A weaker rand pushed the value of exports up 7.2% in the quarter, compared with just 1.8% in the last three months of 2013.

The softer currency also boosted portfolio flows, countering outflows seen at the start of the year when uncertainty around the United States Federal Reserve's tapering programme hit risky assets.

The rand hit a five-year low of R11.39 against the dollar earlier in the year, but has recouped some of those losses and traded at R10.84 on Wednesday.
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Rand - Dollar
18.90
+0.2%
Rand - Pound
23.85
+0.2%
Rand - Euro
20.38
+0.3%
Rand - Aus dollar
12.31
+0.2%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
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