PRETORIA (Reuters) – South Africa’s current account deficit narrowed to 2.2 percent of gross domestic product (GDP) in the fourth quarter, from a revised 3.7 percent in the third quarter, central bank data showed on Thursday.
Africa’s most advanced economy is heavily reliant on portfolio inflows to finance gaping current account and budget deficits that have widened in recent years as tax revenues and fixed investments stalled, mainly over weak economic growth and policy uncertainty.
The rand was largely unmoved soon after the release, trading at 14.28 per dollar.
In January the rand advanced more than 5 percent against the dollar as signs the United States’ central bank would keep lending rates low spurred a flood of money into emerging markets
The currency has since softened as the crisis at state utility Eskom put the brakes on demand.
The quarterly trade balance showed a larger surplus of 71.8 billion rand ($5.03 billion) in the three months to the end of December, from a surplus of 10.2 billion rand in the previous three months.
The central bank said the improved trade balance was due to the higher value and volume of exports while the price of imports declined. South Africa’s terms of trade, however, deteriorated due to the weaker currency.
($1 = 14.2876 rand)
Reporting by Mfuneko Toyana; Editing by Andrew Cawthorne