The rand strengthened against the dollar on Wednesday after the markets reacted positively to Finance Minister Enoch Godongwana’s Medium-Term Budget Policy Statement (MTBPS), in what economists dubbed a ‘market- friendly’ fiscal statement.
“The MTBPS saw a better-than-expected, market-friendly fiscal statement, detailing a substantially improved fiscal situation and a significant further reduction in fiscal risk,” said Johann Els, the chief economist at Old Mutual Investment Group.
PPS Investments said the MTBPS presented a further improved fiscal position, despite the global macroeconomic environment having weakened since February.
By 5pm the rand was at R17.97 to the dollar, 23c higher than the same time the previous day.
The JSE all share index gained 1.9% to close at 67 103.09 points.
Chantal Marx, the head of investment research at FNB Wealth and Investments, said this was a steady budget from a market perspective, striking a decent balance in being equity and bond friendly.
“The rand held firm, bond yields came down across the curve and the equity market held its own. The Financials 15 index spiked during the speech and the Mid-Cap Index (a good proxy for SA Inc) turned positive during the delivery after having traded in the red for most of the day,” Marx said.
Annabel Bishop, the chief economist at Investec, said the rand had strengthened to R17.96 against the dollar on Wednesday afternoon, from R18.15 in the morning, “but was at R15.19 after the February Budget this year, with a severe risk-averse environment in global financial markets weakening the rand in the interim”.
Bianca Botes, a director at Citadel Global, said the rand continues to see-saw. “It recovered overnight after flirting with the R18.50 against the dollar mark during the local session yesterday (on Tuesday).”
BUSINESS REPORT