South Africa’s rand softens ahead of current account data

JOHANNESBURG (Reuters) – South Africa’s rand was slightly softer against the dollar early on Tuesday with scope to weaken further should a central bank report show a wider-than-expected current account deficit.The local unit tends to be hit harder than its peers when investors bail out of emerging markets which offer higher yields but are perceived to carry greater risk.At 0632 GMT the rand traded at 12.4180 to the dollar, down 0.19 percent from where it ended Monday’s New York session.Government debt also eased, with paper maturing in 2026 inching up 1.5 basis points to 7.955 percent.Having taken its cue mainly from global trends in recent days, the forex market was largely focused on the central bank’s quarterly bulletin due out at 0800 GMT.Economists polled by Reuters expected data to show South Africa’s current account narrowed slightly to 5.8 percent of GDP in the fourth quarter of 2014, from 6 percent in the third.”After a series of below-expected data prints, including mining and manufacturing data last week, as well as news regarding Eskom, some compression in the current account would be welcome news for the rand,” Standard Bank said in a note.State power utility Eskom’s struggles to meet demand, while ensuring the national grid does not collapse, have underpinned the structural constraints hampering growth in Africa’s most advanced economy.