JOHANNESBURG (Reuters) – South Africa’s rand was weaker on Monday as investors awaited a national budget speech later this week and markets kept an eye on U.S foreign policy developments.
At 0707 GMT, the rand traded at 18.30 against the dollar, about 0.2% weaker than its previous close.
Domestic investor attention will be on the much anticipated national budget presentation by Finance Minister Enoch Godongwana on Wednesday.
The budget was postponed last-minute last month over disagreements within the country’s coalition government over increasing the value added tax by two percentage points.
“The second version of the budget is expected to include a smaller VAT hike… and spending cuts to balance the books,” said Andre Cilliers, currency strategist at TreasuryONE.
The rand gained against the greenback last week as markets processed U.S. policy developments.
“The probability remains high that the rand could extend its appreciation versus the dollar through the weeks and months ahead, especially if Wednesday’s budget is prudent,” ETM Analytics said in a research note.
Markets will also keep a keen eye on any developments after U.S. President Donald Trump said on Friday that his country is stopping all federal funding to South Africa.
On the Johannesburg Stock Exchange, the blue-chip Top-40 index last traded about 0.3% weaker.
South Africa’s benchmark 2030 government bond was little changed in early deals, with the yield at 9.08%.
(Reporting by Sfundo Parakozov; Editing by Michael Perry)
