Rand steadies, focus on budget

Feb 22 2016 09:32


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Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg - The rand was little changed against the dollar in early trade on Monday as hopes for further interest rates hikes buoyed sentiment, although investors were cautious ahead of the budget later in the week.

At 08:45, the rand traded at R15.4000/$, not far off its Friday's close of 15.3850.

The currency last week traded at its strongest levels this year, firming to R15.2460/$ on Thursday, after rising inflation bolstered expectations that the South African Reserve Bank would hike interest rates further.

Focus this week is on Finance Minister Pravin Gordhan's three-year budget presentation to Parliament on February 24. Analysts have cautioned that the rand could resume the downward spiral triggered by the clumsy changing of finance ministers in December if the budget fails to convince investors that prudent fiscal policy remains intact.

"All eyes will be on Gordhan this week," NKC African Economics said in a note.

"If he draws large enough line in sand to appease rating agencies and ensure foreign investors that government has been shaken form its jaded state we might see rand make run at R15/$, though flipside is also true."

Stocks were set to open higher at 09:00, with the JSE's Top 40 futures index up 1.45%.

AngloGold Ashanti [JSE:ANG] said on Monday that suitors have expressed interest in buying or partnering in its idled Obuasi mine in Ghana.

In fixed income, government bonds weakened with the yield for the benchmark instrument due in 2026 adding 1 basis point to 9.185%.

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