South African rand weakens as investors await budget speech


South African Rand coins are seen in this photo illustration, File. REUTERS/Mike Hutchings

JOHANNESBURG, Feb 21 (Reuters) – The South African rand was slightly weaker on Tuesday, with investors awaiting the finance minister’s budget speech due the following day that is likely to provide cues on the government’s policy trajectory.

At 0639 GMT, the rand traded at 18.1325 per dollar, about 0.18% weaker than its previous close of 18.1000.

The dollar was up about 0.1% against a basket of global currencies , trading slightly below recent peaks as a three-week rally faded and traders waited for economic data due this week.

South Africa’s Finance Minister Enoch Godongwana will deliver his 2023 budget speech on Wednesday. Apart from presenting an updated revenue, expenditure and economic growth forecasts, Godongwana is expected to outline a plan for the government to take on part of the debt of struggling state power utility Eskom.

“The ZAR is poised for a big move in either direction tomorrow,” said ETM Analytics in a research note.

The rand is on the defensive as one of the worst-performing emerging market currencies this year and is susceptible to any bad news, it said.

Also this week, global watchdog the Financial Action Task Force (FATF), which sets standards on combating money laundering and illicit financing, could add South Africa to its “grey list” at meetings in Paris, which could hurt local asset prices.

The government’s benchmark 2030 bond was slightly stronger in early deals, with the yield down 0.5 basis points at 10.185%.

Reporting by Nellie Peyton; Editing by Sherry Jacob-Phillips

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