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Johannesburg - The rand and bonds strengthened on Wednesday after the government cut its budget deficit forecast and sought to demonstrate its fiscal discipline in an interim budget.
The rand advanced to R9.7655 against the dollar after Finance Minister Pravin Gordhan announced a lower budget deficit forecast, from R9.8180 before he began speaking to parliament.
The government lowered the budget deficit forecast for the year to March 2014 to 4.2% of gross domestic product, from the 4.6% projected in February due to lower spending and technical effects from changes to how it calculates the fiscal balance .
The Treasury also slashed 2013 growth expectations to 2.1% of GDP from 2.7% forecast in February.
"There was a relatively strong knee-jerk reaction as soon as the headlines came out. We think there's a number of positives the market will likely take from the budget," said ETM analyst Rob Price.
"There were some relatively encouraging deficit forecasts. We're looking into how they've technically changed the way they calculate the deficit but on face value it looks better."
At 14:50 GMT, the rand had slipped to R9.7850 to the dollar, down nearly 0.4% from its New York close on Tuesday.
Government bonds were firmer, with the yield on the 2026 government bond down 2 basis points at 7.715%, while that on the 2015 paper was 6.5 basis points lower at 5.725%.
The rand advanced to R9.7655 against the dollar after Finance Minister Pravin Gordhan announced a lower budget deficit forecast, from R9.8180 before he began speaking to parliament.
The government lowered the budget deficit forecast for the year to March 2014 to 4.2% of gross domestic product, from the 4.6% projected in February due to lower spending and technical effects from changes to how it calculates the fiscal balance .
The Treasury also slashed 2013 growth expectations to 2.1% of GDP from 2.7% forecast in February.
"There was a relatively strong knee-jerk reaction as soon as the headlines came out. We think there's a number of positives the market will likely take from the budget," said ETM analyst Rob Price.
"There were some relatively encouraging deficit forecasts. We're looking into how they've technically changed the way they calculate the deficit but on face value it looks better."
At 14:50 GMT, the rand had slipped to R9.7850 to the dollar, down nearly 0.4% from its New York close on Tuesday.
Government bonds were firmer, with the yield on the 2026 government bond down 2 basis points at 7.715%, while that on the 2015 paper was 6.5 basis points lower at 5.725%.
