For first time, South African assets abroad outstrip inflows

Thanks to the rand’s slump.
The value of South African assets abroad outstripped foreign investment into the country for the first time on record — thanks to the rand’s slump.

The difference between South African foreign assets and liabilities swung to a surplus of R113 billion ($7.2 billion) at the end of September from a deficit of R131 billion at the end of June, the central bank said in a statement on its website on December 31. That’s the first positive reading since the Pretoria-based bank began recording the data at the end of 1956.

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“The volatility and decline in domestic and global equity markets as well as the significant decline in the end-of-period exchange rate of the rand resulted in a respective modest decline in foreign liabilities and a substantial increase in South Africa’s foreign assets,” the Reserve Bank said.

The rand plunged 25% against the dollar last year, the worst performance after Brazil’s real among major currencies tracked by Bloomberg. The South African currency has been under pressure because of a slump in commodity prices, lacklustre economic growth and rising interest rates in the US. It fell to a record low of 16.0543 against the dollar in December after President Jacob Zuma unexpectedly fired his finance minister.

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The rand fell 1.43% against the dollar to 15.8594 against the dollar as of 23h55 in Johannesburg on Wednesday.

©2016 Bloomberg News

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