South Africa's rand extended losses against the dollar on Thursday after Finance Minister Tito Mboweni gave a bleak budget speech a day earlier in which he slashed growth forecasts and predicted ballooning debt, raising fears of a ratings downgrade. Stocks rose, led by gains in mining shares. At 1505 GMT the rand was 0.74% weaker at 15.1120 per dollar.
Government bonds also weakened further, with the yield on the benchmark instrument up 6 basis points to 8.495%, as investors faced the prospect of South Africa's losing its last investment-grade rating, from Moody's. On the bourse, the Top-40 index was up 1.09% while the broader all-share gained 1.25%.
The gold stocks index was up nearly 6%, as AngloGold Ashanti jumped 7.37% while Gold Fields was up 5.7%. "Trying to hang on to a long dollar position was close to impossible as everyone scrambled to the exit door," said Standard Bank chief trader Warrick Butler in a note. Mboweni cut the forecast for 2019 economic growth to 0.5% from 1.5%, put debt at over 70% of gross domestic product in the next two years and the budget deficit at 5.9% - its highest since the 2009 global financial crisis.
Leading gains were gold miners after bullion rose as the dollar came under pressure when the US Federal Reserve cut interest rates, while uncertainty surrounding a US-China trade deal bolstered the metal's appeal as a safe-haven investment.
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