OWN CORRESPONDENT, Pretoria | Friday 6.00pm
SOUTH Africa’s current account deficit unexpectedly narrowed in the third quarter of 1999, the Reserve Bank said in its quarterly economic bulletin, released on Thursday.
Seasonally adjusted and annualised, the third quarter’s deficit came in at R2,5 billion, from R3,6-billion in the second quarter, revised from an originally reported R3,4-billion deficit.
”A positive, though relatively weak, export response to the improvement in the global economy . . . ensured that the deficit on the external current account shrank noticeably in the third quarter,” the bulletin said.
The Reserve Bank said the deficit was more than adequately covered by inflows of portfolio capital. While it noted that portfolio flows are often volatile and their direction can quickly be reversed, they were still positive. ”In fact, the surplus on the overall balance of payments enabled the Reserve Bank to accumulate international reserves steadily and reduce its net open position in foreign currency.”
Thanks to capital flows, the overall balance of payments surplus increased to R4,6-billion in the third quarter, the Bank said, from R2,5-billion in the second quarter.
Relatively stable financial markets and positive prospects for economic growth helped prop up the rand during the period, the bulletin reported, but the currency might have appreciated further had the Bank not bought dollars to boost reserves. — Reuters