Get more Mail & Guardian
Subscribe or Login

Rand declines before US federal policy meeting

The rand depreciated on Tuesday while bonds rose amid bets South Africa’s budget balance swung to a surplus last month.

The Federal’s open market committee, which has said it may start paring stimulus should the US economy meet the central bank’s forecasts, starts a two-day policy meeting on Tuesday. South Africa posted a budget surplus in June for the first time in three months, a report may show.

 

“All eyes are on the Fed,” Mohammed Nalla, head of strategic research at Nedbank Group in Johannesburg, said. “Any sign that implies they might taper their asset purchases sooner rather than later will” undermine the rand, he said.

 

The rand depreciated 0.4% to 9.8363 per dollar as of 11.11am in Johannesburg, trimming the gain in July to 0.5%. Yields on benchmark 10.5% bonds due December 2026 dropped five basis points, or 0.05 percentage point, to 8.17%. The yield is up 26 basis points this month.

 

South Africa’s budget surplus in June was R16.5-billion, compared with a shortfall of R17.5-billion the previous month, the National Treasury may report at 2pm local time, according to the median estimate of four economists in a Bloomberg survey.

 

“Today’s [Tuesday's] data should, on the balance, be positive for the market,” Rand Merchant Bank fixed-income analysts Carmen Nel in Cape Town and Mamello Matikinca in Johannesburg said in emailed comments.

 

The monthly budget surplus “may bring temporary relief to the local market”, which has encountered “a bit of a demand deficit for government bonds”, they said. – Bloomberg

Subscribe for R500/year

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them and get a 57% discount in your first year.

Related stories

WELCOME TO YOUR M&G

If you’re reading this, you clearly have great taste

If you haven’t already, you can subscribe to the Mail & Guardian for less than the cost of a cup of coffee a week, and get more great reads.

Already a subscriber? Sign in here

Advertising

Subscribers only

South Africa breaking more temperature records than expected

The country’s climate is becoming ‘more extreme’ as temperature records are broken

More top stories

South Africa breaking more temperature records than expected

The country’s climate is becoming ‘more extreme’ as temperature records are broken

Environmentalists are trying to save South Africa’s obscure endangered species

Scientists are digging for De Winton’s golden moles, working on the mystery of the riverine rabbit and using mesh mattresses to save the unique Knysna seahorse

Shadow states infest Africa’s democracies

Two recent reports show evidence that democracy in Africa is being threatened by private power networks
Advertising

press releases

Loading latest Press Releases…
×