JOHANNESBURG (Reuters) -The South African rand strengthened on Monday as local news reports said the two biggest political parties in the ruling coalition government were close to an agreement that could end an impasse over the country’s national budget.
At 1240 GMT, the rand traded at 18.38 against the dollar, 0.3% stronger than Friday’s closing level after earlier trading up more than 1%.
Trade in the rand has been highly volatile as negotiations between the African National Congress (ANC) and Democratic Alliance (DA) over the deadlocked budget have dragged on for weeks. Apprehension over U.S. President Donald Trump’s tariff plans has added to the uncertainty.
South African news website News24 reported on Monday that the ANC and DA were close to an agreement that would see the budget being passed. The Business Day newspaper also said a deal was close after the DA submitted final amendments to proposals for a deal on Sunday.
A DA spokesperson told Reuters that the budget negotiations were continuing and the party was hopeful of reaching a deal. An ANC spokesperson did not immediately respond to a request for comment.
The budget was postponed last month because of disagreements between coalition partners over raising value-added tax (VAT) by 2 percentage points to 17%, before Finance Minister Enoch Godongwana presented a revised budget with a 1-point VAT hike spread over two years.
The DA also rejected the revised budget, saying it put the future of the government at risk, but the DA and ANC have continued to talk behind the scenes.
Lawmakers are due to consider the fiscal framework and revenue proposals related to the budget on Wednesday.
On the Johannesburg Stock Exchange the Top-40 index was last down about 0.6%.
South Africa’s benchmark 2030 government bond was stronger, with the yield down 5.5 basis points to 9.1%.
(Reporting by Sfundo Parakozov, Bhargav Acharya and Wendell Roelf; Editing by Alexander Winning, Philippa Fletcher and Shounak Dasgupta)
