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 U.S. Federal Reserve policy pause and pivot is drawing nearer, economists at ETM Analytics said in a research note.
“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.
REUTERS
