Johannesburg - The rand softened against the dollar on
Thursday as investors worried about the government's ability to finance a wide
budget deficit in the face of poor economic growth.
The rand was at R8.8425 against the greenback at 06:28 GMT,
0.27% softer than New York's Wednesday close of R8.8195.
"Probably closer to the truth is that there was nothing
significantly new to either promote growth or reduce the budget deficit or
tackle the unemployment rate," Tradition Analytics said in a note.
In his three-year budget tabled to parliament on Wednesday,
Pravin Gordhan said the 2013 budget deficit would be 4.6% of GDP, a shade wider than
his last forecast in October.
The deficit is a big decline from the 5.2% gap projected for
2012/13, but Gordhan was forced to cut this year's growth forecast once again
Mirroring Gordhan's concerns about growth, the Reserve Bank
said on Thursday demand for credit by South Africa's private sector slowed to
8.64% year-on-year in January, compared with a 10.0% rise in December.
After Wednesday's budget speech, selling of longer-dated
paper was more pronounced, showing investors are worried about the government's
plans to finance its yawning budget gap.
The yield on the three-year bond added 2 basis points to
5.28% and that on the 2026 bond inched up 0.5 basis points to 7.3%.
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