JOHANNESBURG: South Africa's rand held its ground on Monday, weakening only slightly against a surging dollar as concerns over further cabinet reshuffles eased and attention shifted to this week's budget speech. Stocks inched up on the day.
At 1430 GMT the rand had weakened 0.31 percent to 13.6975 per dollar compared with a close of 13.6550 on Friday in New York.
The unit had touched a session-low of 13.7650 earlier on, with downside momentum carried over from the previous Friday's rapid slide to its weakest in 1-1/2 weeks following speculation that President Jacob Zuma may axe his deputy Cyril Ramaphosa.
Zuma's office denied the rumours and the selloff abated with attention now zooming in on Finance Minster Malusi Gigaba's maiden budget speech Wednesday.
Economists expect him to a map out a plan to keep spending in-check in the face of declining tax revenue and growing political pressure to fund large-scale projects.
"A failure to introduce concrete measures to improve growth is likely to see bond yields rise and the currency weaken," said portfolio manager at Old Mutual John Orford.
"Whether the budget provides a positive or negative signal for investor, corporate and consumer sentiment, markets are likely to remain cautious until the African National Congress's conference in December," Orford added.
Analysts at Eurasia Group said Gigaba's speech would likely fail to effectively address lower growth, a ballooning deficit and struggling state firms.
"He has been unable or unwilling to remove the allies of President Zuma who have contributed to the fiscal problems in which the government finds itself," Eurasia analysts said in a note.
On the stock market, the benchmark Top-40 index advanced 0.1 percent to 51,669 points, while the broader All-share index rose 0.1 percent to 57,999 points.
Pioneer Foods flagged a drop in full-year sales, sending its shares down 2.9 percent to 114.55 rand.
Lonmin was one of the biggest gainers on the bourse with its shares rising 3.1 percent to 16.29 rand. The platinum mining firm is planning to cut more than 1,000 jobs to contain costs, the Solidarity labour union said on Monday.
In fixed income, the yield for the benchmark government bond was inched up by 0.5 basis point to 8.84 percent.
Comments
Comments are closed.