South African rand flat before mid-year budget review

By Reuters News

JOHANNESBURG, Oct 21 (Reuters) - The South African rand was little changed in early trade on Wednesday as investors avoided taking large positions ahead of the mid-year budget review, which is expected to provide clues on the country's fiscal outlook and credit-rating prospects.

  • At 0542 GMT, the rand traded at 16.4075 against the dollar , a whisker away from Tuesday's close

  • Finance Minister Enoch Godongwana is due to deliver the Medium-Term Budget Policy Statement at around 1200 GMT

  • Economists expect Godongwana to present an improved fiscal outlook, with a revenue windfall bolstering a push to regain an investment-grade credit rating

  • But record-high fuel prices, weak economic growth and pressure to spend ahead of November 4 local government elections could limit how much of the windfall the Treasury saves

  • Statistics South Africa is set to release consumer inflation ZACPIY=ECI and retail sales ZARET=ECI data on Wednesday, providing a snapshot of price pressures and consumer demand in Africa's largest economy as the Middle East conflict keeps fuel costs elevated

  • Economists polled by Reuters expect headline inflation to accelerate to 4.7% in September from 4.4% in August, while annual retail sales growth is forecast to edge up to 3.5% in August from 3.4% in July

  • Investec forecasts inflation at 4.6%, while Nedbank expects a reading of 4.8%, citing higher transport costs driven by rising fuel prices and rand weakness

  • The rand fell more than 2% against the dollar in September

  • South Africa's benchmark 2035 government bond was flat in early deals, with the yield at 8.735%

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