Rand weakens with bonds as mini budget misses targets

The rand weakened and bonds reversed gains after finance minister Tito Mboweni said government debt will peak two years later, and higher, than previously forecast, the fiscal gap will widen further and state revenue will continue to undershoot.

The rand declined 0.9% to 14.38 per dollar by 2:21 pm in Johannesburg, reversing a gain of as much as 0.8%. Yields on benchmark 2026 government bonds climbed three basis points to 9.18%, erasing an earlier drop of 10 basis points.

“The market seems to be disappointed with much higher than previously envisaged budget deficits in coming years, which is a timely reminder of the fiscal challenges South Africa faces as a result of weak economic activity,” said Piotr Matys, a London-based emerging-market currency strategist at Rabobank.

� L.P