CAPE TOWN – The rand weakened as Finance Minister Tito Mboweni’s Budget Speech drew closer on market fears that the minister’s maiden budget could come across as weak and negatively impact the rand.
The domestic currency weakened to R14.15 a dollar from a day’s open of R14.04.
TreasuryONE senior currency dealer Andre Botha said Minister Mboweni would have to tread the line very carefully, especially when discussing the state of state-owned entities (SOEs) in the country and how to salvage them.
“There is some real concern that the budget could come across as weak and this could impact the rand negatively. Rating agencies will watch the developments quite closely and a bad budget will almost certainly see the vultures circling with regards to South Africa's credit rating,” said Botha.
Corporate treasury manager at Peregrine Treasury Solutions, Bianca Botes, said now that economic D-day was upon us markets would seek clarity and answers for embattled SOEs with the focus on Eskom and SAA, taxation and the government’s debt and the wage bill.
“Minister Mboweni will aim to strike a balance in a very tough environment where stakeholders, such as ratings agencies and unions, are at odds about what the budget should contain,” said Botes.
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