Rand steadies, focus on budget

folarin okunola

February 24, 2016 8:58 AM

At 0645 GMT, the rand traded at 15.4000 versus the dollar, not far off its Friday's close of 15.3850.

A man counts South African rand notes in a file photo. REUTERS/Michael Buholzer

South Africa's rand was little changed against the dollar in early trade on Monday as hopes for further interest rates hikes buoyed sentiment, although investors were cautious ahead of the budget later in the week.

The currency last week traded at its strongest levels this year, firming to 15.2460/dollar on Thursday, after rising inflation bolstered expectations that the South African Reserve Bank would hike interest rates further.

Focus this week is on Finance minister Pravin Gordhan's three-year budget presentation to parliament on Feb. 24.

Analysts have cautioned that the rand could resume the downward spiral triggered by the clumsy changing of finance ministers in December if the budget failed to convince investors that prudent fiscal policy remains intact.

"All eyes will be on Gordhan this week," NKC African Economics said in a note.

"If he draws large enough line in sand to appease rating agencies and ensure foreign investors that government has been shaken form its jaded state we might see rand make run at 15/dollar, though flipside is also true."

Stocks were set to open higher at 0700 GMT, with the JSE securities exchange's Top-40 futures index up 1.45 percent.

Africa's top bullion producer AngloGold Ashanti Ltd said on Monday that suitors have expressed interest in buying or partnering in its idled Obuasi mine in Ghana.

In fixed income, government bonds weakened with the yield for the benchmark instrument due in 2026 adding 1 basis point to 9.185 percent.

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