Trade Deficit Hurts South African Rand

The South African rand fell today after the country posted the trade deficit in April, which caused the concerns that the nation’s economy will be more dependent on the foreign financial inflows.
South Africa’s economy posted the trade deficit of 1.89 billion rand ($246 million) the last month, following the revised surplus of 458 million rand in March. This figure, while better then expected, makes the investors to worry about the nation’s economy. South Africa compelled to rely on the foreign purchases of its stocks and bonds to finance the shortfall.
The deficit will likely become worse as the private consumption increases, leading to growing imports. The analysts say that the deficit may have negative impact on South Africa’s currency.
USD/ZAR traded at about 7.666 today as of 20:58 GMT after opening at 7.589. EUR/ZAR traded near 9.4252 up from the opening price of 9.3144.

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