The rand rose in early trade on Monday, the start of a data-heavy week that includes the government’s mid-term budget statement.
At 9.01am, the rand traded at R18.79/US$, about 0.4% stronger than its previous close. Meanwhile, the dollar edged down 0.08% against a basket of global currencies.
Finance minister Enoch Godongwana will on Wednesday table in parliament the medium-term budget policy statement (MTBPS), which updates economic forecasts, adjusts the budget and makes emergency changes to spending.
The rand’s appreciation in recent days is surprising given that Godongwana will likely highlight the deterioration of South Africa’s fiscal position, analysts at ETM said.
The currency could be drawing strength from more hawkish talk from the South African Reserve Bank, which has left the prospect of another rate hike on the table, they said.
“The broader picture remains worrisome, with all eyes turning to the MTBPS to determine if the government has the appetite to implement urgently needed structural reforms,” ETM Analytics said in a research note.
Central bank data on Monday showed that South Africa’s credit growth had risen to 4.6% in September from 4.39% in August, and that M3 money supply growth was at 7.67% in September, down from 8.53% the previous month. South Africa’s benchmark 2030 government bond fell slightly in early deals, with the yield up 2.5 basis points at 10.685%. — Nellie Peyton, (c) 2023 Reuters