JOHANNESBURG: South Africa’s rand weakened against a stronger dollar on Thursday, after rising following the release of the mid-term budget that showed an improvement in the country’s fiscal outlook. At 0655 GMT, the rand traded at 17.9550 against the dollar, 0.11% weaker than its previous close.

The National Treasury said on Wednesday South Africa’s deficits were seen shrinking more quickly than before in the next three years, with debt stabilising at a lower level, putting it in a stronger position for any future economic shocks.

The rand’s strong advance can’t be fully attributed to the mid-term budget so much as to mounting bets that a US Federal Reserve policy pause and pivot is drawing nearer, economists at ETM Analytics said in a research note.

South African rand weakens in early trade

“While signs of continued fiscal restraint and encouraging debt-to-GDP forecasts in the Medium Term Budget Policy Statement were welcome, investors are well aware of the risks to the government’s optimistic outlook,” ETM Analytics added.

The government’s benchmark 2030 bond was weaker in early deals, with the yield up 3 basis points to 10.760%.