News Column

Rand holds on to gains before Budget

February 27, 2014

The rand was marginally firmer against the dollar today, building on four days of gains caused by stronger-than-expected growth at the end of last year and expectations of a solid budget from finance minister Pravin Gordhan.

The rand was at 10.72 against the dollar at 8.07am, a touch firmer than yesterday's New York close but a shade weaker than the previous |session's high of 10.70, the currency's strongest level in five weeks.

Gordhan will stick closely to his previous spending plans and deficit targets when he presents his budget today. Economists expect a budget deficit of 4.2 percent of GDP for the 2014/15 financial year, wider than the 4.1 percent target outlined in October.

Any marked changes to these projections could affect domestic bonds and the rand, although analysts said Gordhan was unlikely to pull any surprises, less than three months before the elections.

However, besides Gordhan's plans for this financial year, bond investors will be looking for evidence that the government remains committed to bringing South Africa's budget deficit towards more sustainable levels over the medium term.

Government bonds were firmer, with the yield on the benchmark 2026 issue down 3.5 basis points at 8.510 percent and that on the 2015 bond 4 basis points lower at 7.070 percent. - Reuters

Daily News

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Source: Daily News (South Africa)

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