Johannesburg - The rand weakened against the dollar before Finance Minister Pravin Gordhan’s mid-term budget speech that may raise the nation’s fiscal-deficit target.
South African bond yields retreated as inflation slowed.
The inflation rate in Africa’s largest economy fell to 6 percent in September, compared with 6.4 percent the previous month, according to a report from Pretoria-based Statistics South Africa.
That was in line with the median estimate of 26 economists surveyed by Bloomberg.
Gordhan will present revised growth and deficit targets to Parliament in Cape Town at 2 p.m.
“The rand is nervous ahead of the mid-term budget speech,” Ion de Vleeschauwer, the Johannesburg-based chief dealer at Bidvest Bank, said by phone.
The rand weakened 0.6 percent to 9.7987 per dollar by 10:24 a.m. in Johannesburg.
Yields on 10.5 percent government bonds due December 2026 fell six basis points, or 0.06 percentage point, to 7.64 percent, the lowest in 4 1/2 months.
The currency also declined as the price of commodities dropped.
South Africa has the world’s largest-known reserves of platinum, used in carmaking, and chrome and is the sixth-largest producer of gold.
The spot price of gold declined 0.5 percent to $1,333.83 an ounce, paring its weekly gain.
Platinum fell 0.8 percent to $1,438.10 per ounce.
Weaker-than-estimated US non-farm payroll data boosted commodities and emerging-market assets, including the rand, which strengthened 1.1 percent yesterday.
Foreign investors bought a net 569 million rand ($58 million) of South African bonds and sold 530 million rand of shares yesterday, according to the Johannesburg Stock Exchange. - Bloomberg News