JOHANNESBURG (Reuters) -The South African rand was slightly stronger on Tuesday after the second-biggest party in the coalition government said it would vote in support of the last major piece of budget legislation.
The Democratic Alliance (DA) said it would back the Appropriation Bill in parliament on Wednesday after President Cyril Ramaphosa acceded to one of its demands by firing a minister it had accused of misconduct.
The budget has been held up for months by wrangling between the DA and Ramaphosa’s African National Congress party.
At 1515 GMT the rand traded at 17.6050 against the dollar, up 0.1% on Monday’s closing level.
Morgan Stanley said it had turned more bullish on South African government debt in the wake of the minister’s removal, which it said had opened the door for political tensions to ease.
South Africa’s benchmark 2035 government bond gained on Tuesday, as the yield fell 14 basis points to 9.845%.
Markets reacted little to a decline in a central bank business cycle indicator that gauges the local economic outlook. The leading indicator fell 1.3% month-on-month in May, following a 0.6% decrease in April.
The Johannesburg Stock Exchange’s Top-40 index closed down 0.4%.
(Reporting by Alexander Winning and Marc Jones; Editing by Sharon Singleton and Jan Harvey)
