Rand, bonds cheered after surprise trade surplus

A 4.6% increase in exports lifted the country’s trade balance to a R4.99 billion surplus in May.

The rand raced to a session high against the greenback while yields on bonds fell sharply after South Africa’s trade balance swung to a surprise surplus on Tuesday.

A 4.6% increase in exports lifted the country’s trade balance to a R4.99 billion surplus in May, better than consensus predicting a R3.5 billion shortfall and following a R2.5 billion deficit previously.

By 1535 the rand firmed 0.84% to 12.1450 per dollar , slightly softer having stretching gains as much as one percent towards the 12.12 resistance.

“The latest trade data is a little more encouraging from the perspective of helping to meaningfully reduce South Africa’s deficit on the current account,” Kevin Lings, chief economist at Stanlib, said in a note.

Lings however warned that the decrease in imports signalled sluggish economic activity.

Government bonds also reaped some relief, with the benchmark issue due in 2026 shedding 10 basis points to 8.25%.

“Today’s been a mixed bag, its a reaction to the data but the rand also strengthened as the US session got going, with reports that the Greeks have asked for a new bailout program,” said economist Ricardo da Camara of ETM Analytics.

Greece pleaded for a short-term bailout extension on Tuesday to avert defaulting on its 1.6 billion euros debt, with the Mediterranean nation’s pleas discussed in a last-ditch conference call of eurozone finance ministers.

“There is some optimism around the situation in Greece. The rand and the Turkish lira are doing well against the dollar, but the situation remains fluid,” da Camara said.

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