Rand steady ahead of budget speech

The rand was flat early on Wednesday, with its direction during the day likely to depend on the outcome of a speech on the 2023 budget, analysts said.

At 09:56, the rand traded at R18.26 per dollar. On Tuesday it hit its lowest level so far this year at R18.32.

Finance Minister Enoch Godongwana will deliver his budget speech at 14:00 local time. Investors will be watching closely for pointers to the government’s policy trajectory.

The focus will be on the state’s approach to South Africa’s power crisis. Hours of daily power cuts have crippled businesses in Africa’s most industrialised economy and weakened growth prospects for this year and next.

Godongwana is expected to outline a plan for the government to take on part of the debt of struggling state power utility Eskom. He will also present updated revenue, expenditure and economic growth forecasts.

“The potential for a relief rally exists if the plans around Eskom are fiscally sensitive, prudent and credible,” said ETM Analytics in a research note.

But the rand is on the defensive and Godongwana faces a tough task of restoring confidence in the economy, it said.

The government’s benchmark 2030 bond was slightly weaker in early deals, with the yield up 0.5 basis points at 10.260%.