LONDON, (The Southern African Times) – South Africa’s rand extended gains and benchmark local government bond yields nudged lower on Thursday, after the government pledged to cut the deficit and curb debt in its mid-term budget.
The rand ZAR=D3, ZAR= strengthened to 15.19 to the dollar in the wake of the announcement, up 1.5% on the day while 10-year sovereign bond yields ZA10YT=RR – which move inverse to price – eased to an intraday low of 9.285%, Refinitiv data showed.
“Positive with room for improvement,” said Danelee Masia at Deutsche Bank in a note to clients in reaction to the budget.
“Slower than consensus consolidation path, but still considerably better than the February Review,” Masia said, noting that upward revenue revisions by the treasury had been more conservative than expected but that this year’s overrun has helped to accommodate future additional expenditure pressures.
