The South African rand was slightly weaker in early trading on Wednesday as attention turned to the finance minister’s highly anticipated budget speech.
At 0612 GMT, the rand traded at 17.6725 against the U.S. dollar, marking a 0.1% decline from its previous close. The mid-term budget will begin around 1200 GMT and is the first under a coalition government formed after the African National Congress party lost its majority.
This coalition government has pledged to enhance economic growth and advance reforms, which has helped boost investor confidence and contributed to a rally in both the rand and local currency debt.
“The currency market will be watching closely for signs of such reforms and structural improvements,” Commerzbank analyst Volkmar Baur said in a note.
“Nevertheless, the fiscal situation is tight and the budget will, hence, provide an insight into the government’s priorities.”
Economists polled by Reuters expect that Finance Minister, Enoch Godongwana, will announce a lower budget deficit estimate for 2024/25 compared to the figures provided in February’s main budget.
However, looking ahead, Godongwana faces ongoing challenges, including state-owned enterprises seeking bailouts and trade unions demanding wage increases above inflation.
In early trading, South Africa’s benchmark 2030 government bond experienced a slight rise, with yields falling by 3.5 basis points to 9.235%.
