An emerging markets fund with one of the deeper correlations to precious metals prices, it has not been surprising to see the iShares MSCI South Africa ETF (NYSEArca: EZA) struggle this year. South Africa’s status as a major gold producer, the world’s largest platinum mining nation and the second-largest palladium producer has pressured EZA this year.

South Africa’s perch atop the precious metals-producing world ensures the rand and EZA have an intimate correlation to the price of those metals. Notably, EZA does not hedge its foreign currency exposure so even though this is an equity fund, investors are exposed to fluctuations in the rand. [More Problems Looming for South Africa ETF]

Falling metals prices and a plunging rand have combined to create wide current account deficits in Africa’s largest economy, but that scenario is showing signs of ebbing, which could be a boon for EZA. South Africa’s June trade deficit was $777 million, the smallest this year. The government forecasts the current-account deficit, the broadest measure of trade in goods and services, will average 6.2 percent of GDP annually for the next three years, report Andres Martinez and Mike Cohen for Bloomberg.

Wide current account deficits are problematic for other developing nations beyond South Africa with India being a prime example. However, a wide deficit for South Africa is problematic because the country is heavily dependent on foreign investment in its capital markets to finance the deficit. Wider deficits can make emerging economies less appealing to investors as highlighted by the $1 billion pulled from Indian stocks in July. [Are India ETFs Becoming The New Brazil ETFs?]

South Africa’s widening deficit has also plagued the rand. The sagging rand, one of the worst-performing emerging markets currencies this year, caused yields on South African sovereign debt and the credit default swaps used to insure those bonds to spike in June. [South Africa ETF Falls as Rand Hits Four-Year Low]