JOHANNESBURG (Reuters) -South Africa’s rand was slightly weaker on Monday as investors awaited a national budget speech later this week and markets kept an eye on U.S. foreign policy developments.
At 1508 GMT, the rand traded at 18.28 against the dollar, about 0.1% weaker than its previous close.
“While its (the rand’s) trade today is consistent with broader moves in the emerging market FX (foreign exchange) space, it may begin to trade with a slightly more idiosyncratic flavour as the week progresses,” said Danny Greeff, co-head of Africa at ETM Analytics.
“This is due to the fact that Finance Minister Godongwana will be presenting the government’s budget on Wednesday, which is a structural driver of the rand, given past fiscal decay and recent attempts to steady the ship.”
The budget was postponed at the last minute last month over disagreements in the coalition government over increasing value added tax by two percentage points.
Greeff said that stakeholders will closely scrutinise how the authorities intend to achieve fiscal balance.
The rand gained against the dollar last week as markets processed U.S. policy developments.
Markets will also keep a keen eye on any developments after U.S. President Donald Trump said on Friday that Washington was stopping all federal funding to South Africa, having already signed an executive order last month to cut financial assistance.
On the Johannesburg Stock Exchange, the blue-chip Top-40 index closed down about 1.6%.
South Africa’s benchmark 2030 government bond was stronger, with the yield down 1.5 basis points at 9.055%.
(Reporting by Sfundo Parakozov and Tannur Anders;Editing by Michael Perry and Kevin Liffey)
