South Africa’s rand extended losses in early deals on Thursday, a day after Finance Minister Malusi Gigaba flagged weaker growth expectations and rising government debt in his budget speech
At 0624 GMT, the rand traded at 14.1600 versus the dollar, 0.73 percent weaker from its New York close on overnight.
Gigaba said in his medium-term policy statement that the budget deficit was likely to reach 4.3 percent of gross domestic product in the 2017/18 fiscal year, the highest since 2009.
“The rand and bond yields are still suffering from the disappointing budget hangover,” RMB Global Markets said in a note. “Forget the numbers, the gist of the budget is this: technocrats painted a realistic and precarious state of public finances, but said they can’t do anything.”
Government bonds were also weaker, and the yield for the benchmark instrument due in 2026 rising 26 basis points to 9.345 percent.
Reporting by Tiisetso Motsoeneng; Editing by Toby Chopra (Reuters)