The South African rand showed slight strength in early trading on Wednesday, as lawmakers were preparing to vote on the initial pieces of budget legislation later that day.
Should the vote pass, it may enhance local asset prices by providing greater clarity regarding the fiscal direction after months of political disputes.
Delays in the budget’s progress arose from disagreements within the coalition government, but many of these issues have been addressed following revisions made in a third budget version presented by Finance Minister Enoch Godongwana last month.
At 0720 GMT, the rand was trading at 17.6950 against the dollar, reflecting a 0.1% increase from Tuesday’s closing value. A domestic business confidence index (ZABCI=ECI) is scheduled for release at 0930 GMT.
Meanwhile, the dollar was approximately 0.2% stronger against a basket of currencies after the U.S. and China concluded trade discussions in London, resulting in a “framework agreement” that suggests a potential thaw in relations, though it provided limited specifics.
Additionally, U.S. inflation data expected later on Wednesday could influence global market sentiment. In early trading, South Africa’s benchmark 2035 government bond displayed weakness, with the yield rising by 4.5 basis points to reach 10.115%.
