South African rand firmer as market awaits budget
- White House trade adviser Peter Navarro said his comments that the trade deal with China was "over" were taken out of context.
- Given how the emergency budget has little fiscal space to manoeuvre, Mboweni is walking on the tightest of ropes.
JOHANNESBURG: South Africa's rand edged up on Tuesday as risk appetite improved after President Donald Trump offered reassurance that a US trade deal with China was on track, quelling market concerns that Washington may be ditching the agreement.
At 1500 GMT, the rand was trading at 17.2200 per dollar, 0.72% firmer than its previous close.
White House trade adviser Peter Navarro said his comments that the trade deal with China was "over" were taken out of context. Trump chimed in, saying the Phase 1 trade deal struck with China in January was fully intact.
Locally, on the radar is Finance Minister Tito Mboweni's emergency budget in response to the COVID-19 crisis due on Wednesday that is expected to show a markedly wider budget deficit.
"Given how the emergency budget has little fiscal space to manoeuvre, Mboweni is walking on the tightest of ropes," Lukman Otunuga, senior research analyst at FXTM, said in a note.
"Whatever the outcome of the speech tomorrow, it will certainly have an impact on the South African rand which has slightly gained against the dollar today."
Trump's assurances boosted markets globally, including the Johannesburg Stock Exchange (JSE). The benchmark FTSE/JSE all share index closed up 2.48% to 55,574 points and the top 40 companies index gained 2.84% to end the day at 51,295 points. Gold continued to be a preferred safe haven investment due to a fear of a rebound in coronavirus cases with the JSE's gold index up over 6%.
Bonds weakened, with the yield on the 2030 government issue up 6 basis points to 9.340%.
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