South African rand gains, but analysts say much more appreciation unlikely

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South African rand gains, but analysts say much more appreciation unlikely

10:56 CAT | 22 Sep 2023

File photo: Reuters

The South African rand gained against the dollar in early trade on Friday, but analysts said they saw little room for meaningful appreciation before the mid-term budget on Nov. 1. On Thursday the South African central bank left its main interest rate on hold despite inflation being firmly within its target, stressing that deteriorating public finances risked fuelling price pressures.

Economists said the central bank’s emphasis on fiscal risks meant there would be a lot of focus on the mid-term budget. Rand Merchant Bank analysts said in a research note on Friday: “The risks associated with the (rand) remain very much around the deterioration of the country’s fiscal position, and seeing any meaningful appreciation ahead of the Medium-Term Budget Policy Statement in November is unlikely as investors wait for clarity.”

On the Johannesburg Stock Exchange, the Top-40 index was up about 0.8%. The benchmark 2030 government bond was slightly weaker in early deals, with the yield up 4 basis points to 10.605%. Reporting by Alexander Winning; Editing by Christopher Cushing headtopics.com

Source: Reuters