JOHANNESBURG (Reuters) -The South African rand was slightly weaker on Tuesday, but analysts said local political developments could lend it support in the coming days.
At 0745 GMT, the rand traded at 17.64 against the dollar, down 0.1% on Monday’s closing level.
The dollar was up 0.1% against a basket of global currencies.
On Monday, President Cyril Ramaphosa removed a minister accused of misconduct by his party’s key coalition partner, which could defuse tensions between the two main governing parties before a budget vote on Wednesday.
The budget has been held up by months of political wrangling, but Wednesday’s vote on the Appropriation Bill is the final hurdle for it to pass.
Morgan Stanley said it had turned more bullish on South African government debt in the wake of the minister’s removal.
It said it now viewed South Africa’s spreads – the premium investors demand to buy South African bonds rather than benchmark debt like U.S. Treasuries – as attractive compared with countries with similar credit ratings.
South Africa’s benchmark 2035 government bond was stronger on Tuesday, as the yield fell 9 basis points to 9.895%.
Markets reacted little to a decline in a central bank business cycle indicator that gauges the economic outlook. The leading indicator fell 1.3% month-on-month in May, following a 0.6% decrease in April.
(Reporting by Alexander Winning and Marc Jones; Editing by Sharon Singleton)
