Rand edges firmer ahead of mini budget

Johannesburg - The rand edged firmer against the dollar on Wednesday after pushing to its strongest level in 25 days in the previous session, as the currency was boosted by Chinese gross domestic product (GDP) data that came in stronger than market forecasts.

The local unit did, however, surrender some of its earlier gains as investors held their bets ahead of Finance Minister Nhlanhla Nene's medium-term budget review later in the day.

READ: Mini budget: Tough task for Nene to convince

The rand has been unable to hold beyond a recent resistance level of R10.980, which it has failed to breach three times in the past three weeks.

READ: Mini budget: Fiscal realism required

At 08:43, the rand inched 0.1% firmer versus the dollar to R11.0305 compared to its New York close, after racing to a five-week record high of R10.9725 in the previous session.

Analysts expect the rand to take direction from Nene's mini budget speech at 14:00, as well as inflation data scheduled for release 10:00.

READ: All eyes on Nene for mini budget

"Dips below R11.00 on USD/ZAR have not been sustained as the market awaits today's key budget speech," said John Cairns, an analyst at Rand Merchant Bank, in a note to clients.

Market watchers expect Nene to reveal a budget deficit that has widened since February's figure of 4.4% of GDP.

"We do not expect any positive surprises, implying the rand should struggle to extend gains," Cairns said.

Government bonds tracked the currency lower, with yields on the benchmark paper rising by 5 basis points to 8.015%.

CHECK OUT OUR MINI BUDGET SPECIAL: http://www.fin24.com/budget