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Rand slides after Fitchs warns of vulnerability

Upbeat US data boosted the greenback.

The rand fell as much as 1.6% against the dollar on Thursday, after upbeat US data boosted the greenback and ratings agency Fitch warned about South Africa’s reliance on offshore portfolio inflows.

The rand slid despite data showing South Africa’s trade balance swung into a surplus of R482.5m in March from a deficit of R8.7bn in February.

The currency hit a session trough of 11.9775 to the dollar, and was at 11.9280 by 1546 GMT, down 1.2% from Wednesday’s close.

The dollar staged broad-based gains after US data showed signs of a stabilising labour market and an economy gathering momentum, putting the Federal Reserve on track to raise interest rates at least once this year.

Earlier on Thursday, Fitch listed South Africa among emerging markets vulnerable to eventual US monetary tightening, given its reliance on portfolio inflows to plug a persistently high current account deficit.

“The strong dollar will continue to affect countries with a high level of US-denominated debt,” RBS said in a market note, singling out Turkeyand South Africa.

In fixed income, the yield on the benchmark government bond due on 2026 added 2.5 basis points to 7.955%.

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