JOHANNESBURG (Reuters) -South Africa’s rand weakened on Thursday as the dollar recovered some ground after recent losses, a day after South Africa’s national budget was tabled before lawmakers and met with resistance.
At 1504 GMT, the rand traded at 18.3325 against the U.S. dollar, about 0.1% weaker than its previous close. It fell more than 1% at one point on Wednesday.
The dollar last traded firmer against a basket of currencies though it remained pressured after data on U.S. producer prices for February came in slightly weaker than expected and traders worried about global growth prospects amid trade tensions.
Domestic investors will keep a keen eye on the post-budget discussions on Friday, following resistance to Finance Minister Enoch Godongwana’s proposal on Wednesday to raise the 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.
Most big parliamentary parties publicly rejected Godongwana’s revised budget, despite the scaling back of the size of a proposed hike in VAT, which currently sits at 15%.
“Political stability will be closely scrutinised during this period and will be held in high regard for rand forecasts,” said Warren Venketas, trading services manager at IG Group.
Data released by Statistics South Africa on Thursday showed mining output fell 2.7% year on year in January, while manufacturing output fell 3.3% year on year in the same month.
On the Johannesburg Stock Exchange, the blue-chip Top-40 index closed up about 0.4%.
South Africa’s benchmark 2030 government bond was weaker, with the yield up 2.5 basis points to 9.11%.
(Reporting by Sfundo Parakozov and Tannur Anders;Editing by Mark Potter and Andrea Ricci)
