South African rand flat before mid-year budget review

JOHANNESBURG: The South African rand was little changed in early trade on Wednesday as investors avoided taking large ​positions ahead of the mid-year budget review, which is ‌expected to provide clues on the country’s fiscal outlook and credit-rating prospects.

At 0542 GMT, the rand traded at 16.4075 against the dollar , ​a whisker away from Tuesday’s close.

Finance Minister Enoch Godongwana ​is due to deliver the Medium-Term Budget Policy Statement ⁠at around 1200 GMT.

Economists expect Godongwana to present an improved ​fiscal outlook, with a revenue windfall bolstering a push to ​regain an investment-grade credit rating.

But record-high fuel prices, weak economic growth and pressure to spend ahead of November 4 local government elections could ​limit how much of the windfall the Treasury saves.

Statistics South ​Africa is set to release consumer inflation  and retail sales data on ‌Wednesday, ⁠providing a snapshot of price pressures and consumer demand in Africa’s largest economy as the Middle East conflict keeps fuel costs elevated.

Economists polled by Reuters expect headline inflation to accelerate to ​4.7% in ​September from 4.4% ⁠in August, while annual retail sales growth is forecast to edge up to 3.5% in ​August from 3.4% in July.

Investec forecasts inflation ​at 4.6%, ⁠while Nedbank expects a reading of 4.8%, citing higher transport costs driven by rising fuel prices and rand weakness.

The rand ⁠fell more ​than 2% against the dollar in ​September.

• South Africa’s benchmark 2035 government bond was flat in early deals, with the ​yield at 8.735%.