JOHANNESBURG (Reuters) -The South African rand edged lower on Monday before this week’s budget speech and a planned meeting between President Cyril Ramaphosa and U.S. President Donald Trump in Washington.
At 1510 GMT the rand traded at 18.0625 against the dollar, down about 0.2% on Friday’s close.
The rand has gained in recent weeks, supported by speculation that the government will announce a lower inflation target imminently and the belief that the coalition government will stay intact despite budget squabbles.
It will face several tests on Wednesday, when Ramaphosa and Trump are due to meet, the finance minister will present a third version of the 2025 budget in parliament, and domestic inflation and retail sales figures will be released.
The Trump meeting is especially fraught with risk as he has repeatedly criticised South Africa since returning to the White House in January.
He has cut all financial aid, expelled South Africa’s ambassador and granted about 50 white South Africans refugee status, having deemed them victims of racial discrimination, a characterisation South Africa rejects.
“The biggest risk to the rand this week will be President Ramaphosa’s visit to the U.S.,” ETM Analytics said in a research note.
Finance Minister Enoch Godongwana makes his third attempt to pass a budget after two were scuppered by disputes with coalition partners over plans to increase tax.
Godongwana will outline how he plans to plug a 75 billion rand ($4.1 billion) revenue hole after giving in to pressure to scrap a proposed value-added-tax hike.
On the stock market, the Top-40 index closed about 0.1% lower. The yield on the benchmark 2030 government bond was flat at 8.88%.
(Reporting by Sfundo Parakozov with additional reporting by Bhargav Acharya;Editing by Alexander Winning, Kevin Liffey, Peter Graff)
