Rand weakens ahead of the Budget

Comment on this story
IOL world currency1 Graphic: Renjith Krishnan.

Johannesburg - The rand weakened against the dollar for the first time in five days before Finance Minister Pravin Gordhan presents his budget amid a slowing economy that is curbing tax revenue.

South Africa’s currency fell as much as 0.4 percent to 8.8494 per dollar and was trading 0.1 percent down at 8.8308 by 9:47 a.m. in Johannesburg.

Yields on 10.5 percent government bonds due December 2026 dropped 1 basis points, or 0.01 percentage point, to 7.23 percent.

Gordhan gives his fourth budget speech at 2 p.m. in Cape Town, against a backdrop of slumping exports to Europe and strikes in the mining industry that curbed economic growth and prompted three credit-rating downgrades.

Gordhan, 63, will probably maintain his deficit target of 4.5 percent of gross domestic product in the year through March 2014, according to the median estimate of 11 economists surveyed by Bloomberg.

“The government faces notably less room to manoeuvre due to the still uncertain macroeconomic backdrop and the elevated ratings risk,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e-mailed comments.

The speech “will most likely focus on infrastructure spending and job creation,” Cairns said.

Africa’s largest economy expanded 2.5 percent last year, down from 3.5 percent in 2011, Statistics South Africa said yesterday. - Bloomberg News

sign up

Comment Guidelines

  1. Please read our comment guidelines.
  2. Login and register, if you haven’ t already.
  3. Write your comment in the block below and click (Post As)
  4. Has a comment offended you? Hover your mouse over the comment and wait until a small triangle appears on the right-hand side. Click triangle () and select "Flag as inappropriate". Our moderators will take action if need be.

  5. Verified email addresses: All users on Independent Media news sites are now required to have a verified email address before being allowed to comment on articles. You are only required to verify your email address once to have full access to commenting on articles. For more information please read our comment guidelines