Rand little changed amid rising virus cases

The rand was little changed early on Friday amid surging global coronavirus infections, despite the currency’s staging a recovering after a gloomy budget earlier in the week.

At 0617 GMT, the rand traded at 17.17 versus the dollar, 0.2% lower than its New York close on Thursday.

The rand had regained ground after the budget speech, which forecast ballooning debt and a higher government deficit, as well as fading hopes globally of a quick economic recovery.

Finance Minister Tito Mboweni said on Wednesday the main budget deficit would widen to a record 14.6% of gross domestic product in 2020/21, while public debt would top 80% as the country borrows to plug gaps in revenue caused by the Covid-19 pandemic.

However rising cases of the new coronavirus across the globe have kept investor optimism in check. In the United States, Florida, Oklahoma and South Carolina reported record increases in new cases on Wednesday and Australia posted its biggest daily rise in two months.

Cases in South Africa have also surged, with confirmed Covid-19 cases up by more than 6 000 from Wednesday to reach over 118 000 by late on Thursday, with more than 2 200 registered deaths. “With minimal data releases today, we are expecting to see the rand test its continued move stronger, as markets search for a new catalyst,” Bianca Botes, executive director at Peregrine Treasury Solutions, said in a morning note.

The rand is expected to trade in a range of 17.00 to 17.30 rand to the dollar, NKC African Economics said in a morning note.

In fixed income, government bonds strengthened with the yield on the 2030 bond down 2.5 basis points to 7.535%.