JOHANNESBURG (Reuters) – South Africa’s rand extended its losses early on Thursday before manufacturing and mining data releases, a day after the national budget was tabled before lawmakers and met with resistance.
At 0710 GMT, the rand traded at 18.37 against the dollar, about 0.3% weaker than its previous close. It fell more than 1% at one point on Wednesday.
Domestic investors will keep a keen eye on the post-budget discussions, following resistance to Finance Minister Enoch Godongwana’s proposal of raising value-added tax by 0.5 percentage point this year and another 0.5 percentage point next year.
The initial budget version shelved three weeks ago had put forward a 2-percentage-point VAT increase this year.
“(The budget) introduces uncertainty, which the ZAR does not need right now,” said ETM Analytics in a research note.
“It (the rand) has been unable to take advantage of the weaker USD in recent weeks, and given the fragility of global equity markets, one gets the sense that the ZAR may be in for a bumpy ride,” the note added.
Statistics South Africa is scheduled to publish January mining data at 0930 GMT, followed by manufacturing output figures for the same month at 1100 GMT.
On the Johannesburg Stock Exchange, the blue-chip Top-40 index last traded up about 0.4%.
South Africa’s benchmark 2030 government bond was flat in early deals, with the yield at 9.085%.
(Reporting by Sfundo Parakozov. Editing by Tannur Anders and Mark Potter)
