Rand weakens, bonds pare gains after budget

Rand weakens, bonds pare gains after budget

2015-02-25 18:28

Johannesburg - SA's rand weakened against the dollar and government bonds pared gains on Wednesday after Finance Minister Nhlanhla Nene raised income taxes, cut economic growth forecasts and widened budget deficit estimates.

Nene said in a budget speech that SA will raise income taxes for the first time in twenty years as weak economic growth kept revenues low and trimmed growth forecasts as chronic electricity shortages strangled economic activity.

Nene also said the government in Africa's most advanced economy would have to borrow from both domestic and global markets to plug the funding gap warning however that unsustainable debt levels would threaten its credit rating.

At 17:00 GMT the rand was trading 0.37% weaker at R11.5145/$.

"It's trading in conjunction with its emerging market peers on the session and global drivers remain key for now," ET market analyst Jana van Dev enter said.

"The bonds have sold off quite sharply off their intraday highs, but they are still stronger."

The yield on the 2026 benchmark was down 5 basis points to 7.605% after falling as much as 14 basis points earlier following Federal Reserve Chair Janet Yellen's comments on interest rates.

Traders are also looking forward to the release of local trade data on Friday for direction.

  • Hugo Monterro - 2015-02-25 19:29

    what do you expect from this clown Haha Nene

  • Vince Muller - 2015-02-25 19:39

    Our countries downfall is only because of the ANC and their alliances, stealing everything.. Nothing else...

  • Jose Pereira - 2015-02-25 20:43

    Seriously. Either your indicators section and the JSE are showing incorrect figures, or you are making a complete misstatement of fact. Rand has strengthened against all currencies by over 1% since the budget????

  • Dawie van der Westhuizen - 2015-02-25 21:39

    Oops, and the stock market throws a key reversal day.

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