SA's current account deficit widens, threatening rand

SAs current account deficit widensSouth Africa's current account deficit widened sharply in the third quarter of this year, central bank data showed on Tuesday, signaling further pressure on the rand currency as markets brace for higher US interest rates.

The current account gap has traditionally been partly financed by portfolio inflows, but these have waned this year as investors expecting the US Federal Reserve to start tightening monetary policy dumped emerging markets.

The shortfall expanded to 4.1% of GDP in the third quarter from 3.1% in the second, the South African Reserve Bank (SARB) said in its December quarterly bulletin. This is the first time in five quarters that it has widened.

Economists polled by Reuters had reached consensus on a 4percent deficit in the third quarter.

The rand, which has weakened more than 20% against the dollar this year, hit a new record low of 14.6150 after the central bank report.


About The Project

South Africa's conduct of international relations, especially its role in international organisations like the UN Security Council, its choice of strategic partnerships, its leadership role in Africa, its public engagement and foreign policy decision making, has been intensely debated in the recent past. The FPA programme aims to provide a nuanced analysis and facilitate a structured discussion of South Africa's foreign policy in a changing world environment for purposes of informing its future direction.

Aims and Objectives of The Project

The purpose of this focus area is to unpack the extent to which the policy in its making, its nature and its application constitutes a principled and pragmatic response to a complex international environment. In doing so, we hope to be guided by an objective to promote a foreign policy that positions SA as a responsible global citizen committed to building bridges between various power blocs for the benefit of Africa and South Africans.

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