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Rand softens ahead of budget

Feb 27 2013 09:30
Reuters
Johannesburg - The rand softened against the dollar on Wednesday ahead of Finance Minister Pravin Gordhan's Budget Speech, which is likely to outline plans for cutting the government's spending deficit amid anaemic economic growth.

The rand was at R8.8428/$ at 08:43, 0.28% weaker than New York's Tuesday close at R8.82.

"Clearly the gap between revenues and expenditures needs to be closed, and today's budget will be about how quickly that might be done and by which means," Barclays Capital said in a note.

Rising borrowing costs for Italy due to a political stalemate following its recent election also weighed on the euro, putting pressure on the rand.

Domestic GDP statistics released on Tuesday showed surprisingly strong economic growth of 2.1% for the fourth quarter of 2012 from 1.2%% in the third quarter, due to a boost from the manufacturing and farm sectors. 

Gordhan is due to present his budget to parliament at 14:00.

The yield on the three-year bond lost 1.5 basis points to 5.235% and that on the longer-dated paper due in 2026 edged up half a basis point to 7.245%.

 

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