News Column

Pressure on emerging markets hits rand

February 27, 2014

The rand was bid at R10.8428 to the dollar at 5pm yesterday, down 10.94c from the same time on Tuesday.

Presenting the Budget, Gordhan cut this year's growth forecast to 2.7 percent and trimmed the deficit forecast to 4 percent of gross domestic product for 2014/15, from a 4.1 percent forecast in October.

Gordhan also said gross government debt would probably climb over the next three years, risking credit-rating downgrades if growth weakened.

Rand Merchant Bank trader Jim Bryson said the softness of the rand was more in line with the Turkish lira, which fell yesterday amid concerns about political instability.

"The lower growth was pretty much expected. I don't think the Budget per se caused this," he said. "If you look at the Turkish lira, that's also weakened today as well.

"I don't think we said enough to affect our ratings. It was more neutral than anything else for the currency."

The yield on the 2026 government bond fell while that on the 2015 paper inched up.

International investors had bought a net R2.81 billion of South African bonds on Tuesday, according to JSE data.

The Star

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: Star, The (South Africa)

Story Tools