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Pretoria - South Africa's current account deficit unexpectedly narrowed in the first quarter of the year, helped by increased external demand while a depreciation in the rand boosted local exports.
The shortfall on the current account was at 5.8% of gross domestic product in the first quarter, from 6.5% in the last three months of 2012, the Reserve Bank said in its June quarterly bulletin on Wednesday.
A pick-up in global economic activity led to an increase in demand for local exports, particularly from emerging market economies, with the sharply weaker rand making local producers more competitive overseas, the central bank said.
Economists polled by Reuters had expected the current account deficit to widen to 7.05% in the first quarter and the smaller gap should buoy the rand.
The current account gap, long a weak spot for the rand, could moderate further if the weaker currency leads to lower imports, senior Reserve Bank official Johan van den Heever said.
"On the basic expectation that with the lower exchange rate level there will be some moderation in imports, one would expect further decline in the deficit," he told a news conference.
The deficit on the current account was financed by a sizeable inflow of foreign capital, as nominal interest rate differentials continued to favour South Africa, the bank said.
The rand has fallen nearly 18% against the dollar since the start of the year, squeezed by worries about the impact of strikes that have hit mining output since late last year.
The currency firmed after release of the current account data, and was at R9.9175/$ by 10:24 compared with R9.99 before.
The shortfall on the current account was at 5.8% of gross domestic product in the first quarter, from 6.5% in the last three months of 2012, the Reserve Bank said in its June quarterly bulletin on Wednesday.
A pick-up in global economic activity led to an increase in demand for local exports, particularly from emerging market economies, with the sharply weaker rand making local producers more competitive overseas, the central bank said.
Economists polled by Reuters had expected the current account deficit to widen to 7.05% in the first quarter and the smaller gap should buoy the rand.
The current account gap, long a weak spot for the rand, could moderate further if the weaker currency leads to lower imports, senior Reserve Bank official Johan van den Heever said.
"On the basic expectation that with the lower exchange rate level there will be some moderation in imports, one would expect further decline in the deficit," he told a news conference.
The deficit on the current account was financed by a sizeable inflow of foreign capital, as nominal interest rate differentials continued to favour South Africa, the bank said.
The rand has fallen nearly 18% against the dollar since the start of the year, squeezed by worries about the impact of strikes that have hit mining output since late last year.
The currency firmed after release of the current account data, and was at R9.9175/$ by 10:24 compared with R9.99 before.
