Home Business and Technology Rand weaker ahead of budget speech

Rand weaker ahead of budget speech

rand

The rand weakened on Tuesday, reflecting nervousness before a budget speech this week and global worries about the spread of coronavirus.

The rand was down 0.3% at 15.2100 per dollar by 1630 GMT, extending losses from Monday and mirroring falls in other emerging market currencies as the virus outbreak gathered pace beyond China.

At home, traders were nervous that a bleak fiscal picture in Wednesday’s budget speech by Finance Minister Tito Mboweni could trigger a downgrade to “junk” of South Africa’s credit rating by Moody’s, the last agency to rate the country investment grade.

“South Africa’s idiosyncratic risks have weighed heavily on investor sentiment,” ETM Analytics economists wrote, saying the risks included growth-sapping power cuts, an unsustainable debt trajectory and a lack of political will to implement reforms.

A Reuters poll last week predicted Mboweni would present an updated budget deficit forecast of 6.2% of gross domestic product for the current fiscal year, up from 5.9% in October.

Local stocks failed to recover ground on Tuesday, a day after touching a two-month low.

The Johannesburg Stock Exchange’s Top-40 Index ended the day less than 0.1% higher at 49,303 points, while the All-Share Index was down 0.1% to 54,809 points.

Bonds were little changed, with the yield on the benchmark 2026 government issue up 0.5 basis points to 7.865%.

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Source – EWN