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Rand weakens on current account jitters

Johannesburg - The rand weakened against the dollar early on Tuesday as investors fretted about upcoming current account data for the second quarter.

At 06:46 GMT, the rand was at R9.9850 per dollar, 0.35% weaker than its close in New York on Monday.

The rand is trading near its strongest level in a month but its strong two-day rally has been interrupted by concerns about South Africa's yawning current account gap, which has previously knocked the rand.

The Reserve Bank will release the second-quarter data at 08:00 GMT.

Economists expect the deficit to be little changed in rand terms but to widen to 5.95% of gross domestic product (GDP) from 5.8% in the first quarter.

The shortfall in the account widened to a record 6.8% in the third quarter of last year, hitting the rand.

"The risk of a wider-than-forecast deficit could push dollar/rand higher. South Africa's external imbalances are the key vulnerabilities that have seen the rand whacked during the recent emerging market rout," said Christopher Shiells, emerging market analyst at Informa Global Markets.

Yields on government bonds rose two basis points with the weaker rand. The 2026 benchmark yield was at 8.315% while the 2015 note traded at 6.19%.

Treasury is looking to sell R900m in 2023 bonds, R900m in 2031 and R550m in 2037 paper in the session.

Results are due after the auction closes at 09:00 GMT.

The Treasury announced it managed to place $2bn of 12-year paper at a 5.875% coupon rate on Monday, attracting European and United States investors.
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