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South Africa's rand edges higher, holds on to post-Budget gains

02/25/2021 | 02:48am EDT
A South African Rand is seen in this illustration picture

JOHANNESBURG (Reuters) - South Africa's rand was slightly firmer early on Thursday, holding on to gains it made in the previous session after Finance Minister Tito Mboweni's budget speech assured some investors that the country could avoid a full fiscal crisis.

At 0630 GMT, the rand was 0.19% firmer at 14.4725 per dollar, a touch off its 13-month high of 14.3950 it hit on Wednesday.

Mboweni announced up to 19.3 billion rand ($1.33 billion) of spending on coronavirus vaccines and forecast a deficit of 14% of gross domestic product this fiscal year, while repeating promises to cut down on expenditure.

The Treasury also announced steep reduction to issuing debt in the local market after leaning heavily on investors for short-term cash in 2020 to fund the revenue shortfall triggered by COVID-19 and subsequent lockdowns.

But not all investors were enthusiastic about the economic recovery path painted by the budget.

Fitch, one of three major credit ratings firms to rank South Africa in subinvestment, said the country still faced "severe challenges" to implementing fiscal consolidation.

Traders said focus would now shift to the focus has shifted back to external developments, specifically Federal Reserve Chairman Jerome Powell's congressional testimony, likely leaving the rand in limbo for most of the session.

($1 = 14.5234 rand)

(Reporting by Mfuneko Toyana; Editing by Rashmi Aich)

© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
DOW JONES AFRICA TITANS 50 INDEX -0.02% 525.03 Delayed Quote.-0.69%
DOW JONES SOUTH AFRICA(ZAR) -0.79% 1958.18 Delayed Quote.11.88%
EURO / SOUTH AFRICAN RAND (EUR/ZAR) 0.14% 17.3585 Delayed Quote.-2.97%
S&P AFRICA 40 INDEX -0.11% 169.73 Delayed Quote.-1.68%
US DOLLAR / SOUTH AFRICAN RAND (USD/ZAR) -0.03% 14.57412 Delayed Quote.-0.41%
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