Rand softer ahead of the budget speech
JOHANNESBURG - The rand retreated as caution weighed ahead of the pivotal budget speech according to NKC Research.
The second wave of Covid-19 infections and the subsequent lockdown restrictions coupled with a slower-than-expected vaccine rollout process will result in a more gradual fiscal consolidation path over the short term.
As such, NKC forecasts the fiscal deficit to narrow this year. Baseline assumption includes the containment of the public sector wage bill, if not during the current fiscal year, then at least through commitment to some public sector wage freezes going forward.
With growth seen at a feeble 2.0 percent this year – from a contraction of 7.3 percent in 2020 – and sputtering along at a sub-3 percent pace over the medium term, implementation of an aggressive front-loaded consolidation is required to stem the growth in public debt.
At the close of local trade, the rand quoted 0.37 percent weaker at R14.65/$, after trading in range of R14.52/$ - R14.70/$. The rand traded on a weaker footing during this morning’s Asian trading session. Expected range today R14.60/$ - R14.90/$.
Brent crude oil
The Brent oil price sank on Friday as Texas oil producers began preparations to restart operations following last week’s cold snap. At the close of local trade, benchmark Brent crude futures quoted 0.80 percent lower at $63.42pb. Crude prices ticked higher during Asian trade this morning.