Rand trading firmer
Headlines that Stage 7 load-shedding would be implemented spooked the market earlier this morning, and we saw the rand sell-off to R18.38. However, the market reacted positively on the release of the budget speech’s embargo, as we saw the rand firm to R18.13 before settling below R18.20. A concern from the budget speech would be that Eskom is receiving a bailout of R254 billion, which would effectively see Debt to GDP peak at 73.6% in 2026, slightly higher than what was expected in the October MTBS. There are a few positives for the consumer with no fuel levy or personal tax income increase, while tax brackets are adjusted for inflation.
Are we out of the woods yet?
The rand is not out of danger yet and could be in for a tough ride in the coming days. The continuation of Hawkish Fed speakers bolsters the chance that the Fed is likely to proceed with three more 25bps hikes this year, and tonight we will be given the inside scoop with the Fed minutes from their last meeting. Should the hawkish trend continue and strong US data further support it, the dollar could find more wind in its sails and push markets weaker.
#BudgetSpeech #Loadshedding #Eskom #GovernmentDebt
