South Africa’s rand remained stable on Friday after a week of turbulence. The currency weakened when the government postponed its national budget but later recovered. A weaker U.S. dollar and rising gold prices helped stabilize the rand. By 08:45 GMT, it traded at 18.33 per dollar, close to its previous close of 18.3225.
The budget, set for Wednesday, was delayed due to disagreements within the coalition government over a proposed value-added tax increase. Analysts say this delay, unprecedented in post-apartheid South Africa, has created uncertainty. Investors now await the revised budget, expected in mid-March. The decision has raised concerns about the government’s stability as it struggles to balance spending and debt.
Commerzbank analyst Volkmar Baur warned that the delay exposes risks within the coalition, calling it an “experiment that could fail at any moment.” The postponement has also raised speculation about possible policy shifts that may impact investor confidence. TreasuryONE strategist Andre Cilliers noted that markets will watch if the revised budget prioritizes debt reduction and spending cuts. A strong fiscal plan could boost the rand in the coming weeks.
Despite domestic concerns, external factors have supported the currency. The U.S. dollar is near its lowest levels this year, making emerging market currencies like the rand more attractive. In addition, gold prices, a key South African export, have risen for eight straight weeks, strengthening the economy.
South Africa’s bond market remained stable. The benchmark 2030 government bond yield dropped slightly, down one basis point to 9.18%. This suggests investors are cautiously waiting for more clarity. With uncertainty still in play, all eyes are on the government’s next moves to restore market confidence.