JOHANNESBURG (Reuters) -South Africa’s rand was little changed in early trade on Friday as investors awaited clarity on a disputed national budget which has roiled domestic markets in recent weeks.
At 0644 GMT, the rand traded at 18.82 against the dollar, near its Wednesday closing level of 18.81.
“This morning, the rand is quoted softer … we expect to see some consolidation between R18.60 and R19.00 ahead of the long weekend,” said Andre Cilliers, currency strategist at TreasuryONE.
South Africa’s biggest political parties have clashed over a proposal to raise the value-added tax (VAT) rate by one percentage point over the next two years.
The VAT increase was withdrawn on Thursday and domestic-focused investors seek clarity on the details of the budget.
“The scrapping of the VAT increase and the subsequent questions on where Treasury is going to find the shortfall in the budget has put the rand under some renewed pressure,” Cilliers said.
Like other risk-sensitive currencies, the rand often takes its cue from global factors and domestic drivers.
In addition to the budget spat, the rand has experienced bouts of volatility linked to uncertainty over U.S. President Donald Trump’s tariff plans.
South Africa’s benchmark 2030 government bond was stronger in early deals, with the yield down 2.5 basis points to 8.845%.
(Reporting by Tannur Anders and Sfundo Parakozov; Editing by Jacqueline Wong)
