JOHANNESBURG: South Africa's rand edged up to its strongest level in a week against the dollar on Tuesday, partly tracking firmer Asian currencies after GDP data in major commodity importer China came out stronger than expected.
The rand's gains could, however, be short-lived if Finance Minister Nhlanhla Nene predicts a wider budget deficit than seen in February and cuts growth forecasts for the ailing economy during his medium-term budget statement on Wednesday.
Nene is expected to target a budget deficit of 4.4 percent of gross domestic product for the 2014/15 fiscal year, according to a Reuters poll.
The rand was at 10.9900 to the dollar at 0643 GMT, up 0.29 percent from Monday's close, and breaching 11.0000 for the first time since Oct. 15.
Government debt was also bid higher, pushing the yield for the 2026 secondary market benchmark 5 basis points lower to 8.025 percent.
"Today has seen a minor push back into risky assets with local government bonds the recipient of some investment capital and this filtered through into a rather blas? rand market," Standard Bank trader Inshaan Omar said in a note.
Some analysts however expected lukewarm appetite for local bonds during Tuesday's weekly auction for 2.35 billion rand of paper, as some investors bet that the Treasury could increase issuance to plug a wider budget gap.
Comments
Comments are closed.