Rand steadies in early trade

Government bonds weakened in early deals, and the yield on the instrument due in 2030 was up 1.5 basis points at 9.43%. 
Image: Shutterstock

The rand steadied on Friday after weakening a day earlier when President Cyril Ramaphosa unveiled an economic recovery plan that raised questions from analysts about how it will be financed.

At 0655 GMT, the rand traded at R16.65 versus the US dollar, unchanged from its previous close. It weakened by around 0.7% in South African trade on Thursday.

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Ramaphosa said on Thursday South Africa will embark on a massive public works and job-creation drive in response to the coronavirus crisis to return Africa’s most industrialised economy to growth.

“The rand reacted cautiously to the announcement as central issues also regarding the financing and the development of public finances had been left open,” Commerzbank emerging market analyst Elisabeth Andreae said in a note.

“Without credible finance many of the promising projects might evaporate. The Minister of Finance and his team are likely to be facing two tough weeks. And rand investors should not expect any miracles.”

Finance Minister Tito Mboweni will lay out spending plans at a mid-term budget on October 28.

Government bonds weakened in early deals, and the yield on the instrument due in 2030 was up 1.5 basis points at 9.43%.

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