South Africa's rand flat after slipping in knee-jerk reaction to budget

JOHANNESBURG: South Africa's rand was largely flat in afternoon dealings on Wednesday, recouping the bulk of losses suffered after finance minister Tito Mboweni presented the annual national budget.

After an initial negative reaction to the budget the currency settled down as traders assessed its impact on South Africa's sovereign credit ratings.

The rand was 0.6 percent weaker at 13.9600 per dollar by 0552 GMT, having earlier touched a low of 14.3700.

"It was a tough budget, but the right things have been said by the finance minister which may be enough to avoid a credit ratings downgrade," said Jan Sluis-Cremer, forex trader at Rand Marchant Bank in Johannesburg.

Mboweni unveiled a $5 billion injection over coming years into cash-strapped utility Eskom in his maiden budget that also forecast wider deficits, rising debt and slower economic growth.

Government bonds were slightly firmer, with the yield on the benchmark government paper due in 2026 easing 0.3 basis points to 8.840 percent.

On the bourse stocks hardly reacted to the budget as most heavily weighted companies earn more of their income abroad than at home.

The benchmark JSE Top-40 index ended 0.9 percent higher 49,405 and the broader All-share index rose by the same margin to 55,691.