Rand struggles against dollar, but up on the crosses
Investors fretted about weak global growth prospects and the domestic budget deficit.
JOHANNESBURG - The rand struggled against the dollar on Tuesday as investors fretted about weak global growth prospects, with worries about the domestic budget deficit likely to add pressure in coming days.
Finance Minister Nhlanhla Nene will present his first budget statement to parliament on 22 October, likely cutting the GDP growth forecast for Africa's most advanced economy.
Analysts also expect Nene to predict wider budget deficits for the next three financial years.
The rand was, however, driven mainly by global factors on Tuesday, hitting a session low of 11.1250 before clawing back to 11.0600 by 1518 GMT, close to where it finished in New York on Monday.
"We saw weakness most of the day because the dollar has been strong and equity markets are under huge pressure, although it seems to have abated this afternoon," Bidvest Bank chief dealer Ion de Vleeschauwer said.
"The buzz word at the moment is global growth; everybody is concerned that the world is going to slow down."
But the rand held its own against other major currencies, gaining 0.52 percent to 14.0018 against the euro and 0.7 percent to 17.6230 versus pound sterling
In fixed income, the yield on the benchmark government bond maturing in 2026 was largely flat at 8.045 percent.
Traders said investors would look next week for commitment from Nene to curb spending, particularly on the public sector wage bill which has contributed to budget deficits averaging around 5 percent of GDP over the last five years.
South Africa's nagging twin deficits on its budget and the current account have tended to render it more vulnerable than most peers during bouts of global risk aversion, when investors dump emerging market assets.