Rand could carry on climbing in February

Finance minister Tito Mboweni is scheduled to present the budget on February 20, but few are expecting major changes from the numbers signalled in his medium-term budget policy statement in October 2018. Should the budget outcome meet expectations, that may reduce the chance of Moody’s Investors Service lowering the nation’s credit rating when it reviews its assessment in March.

Still, investors should be mindful of the rand’s volatile nature, said Standard Bank economist Elna Moolman.

“A pragmatic budget that doesn’t trigger negative sovereign credit rating action might be an initial catalyst for some appreciation,” she wrote in a client note. “There is a risk that, like early last year, rand strength will overshoot once optimism about policy and political reform is revived.”

Bloomberg