South African rand steady, bonds rally amid mid-year budget presentation

By Reuters News
South African Rand coins are seen in this illustration picture taken October 28, 2020. REUTERS/Mike Hutchings/Illustration

JOHANNESBURG, Oct 21 (Reuters) - The South African rand held steady on Wednesday after the government announced two months of fuel price relief to cushion consumers from soaring global oil prices.

  • At 1228 GMT, the rand traded at 16.3726 against the dollar , a whisker away from Tuesday's close

  • South Africa's Finance Minister Enoch Godongwana on Wednesday announced two months of additional fuel price relief in a mid-year budget speech, saying it would cost 10 billion rand ($608.99 million) in foregone revenue

  • South Africa imports most of its fuel, making it exposed to swings in global energy prices, which have been highly volatile since the Middle East conflict erupted in late February.

  • While the currency was broadly steady, the benchmark 2035 government bond rallied on the announcement, with the yield falling sharply by 16 basis points to 8.575%

  • South Africa's inflation ZACPIY=ECI and retail sales ZARET=ECI rose 4.5% and 3.3% year-on-year, respectively.

  • Although inflation rose modestly in September, economists expect a sharper acceleration in October after fuel prices hit a record high

  • On the Johannesburg Stock Exchange, the Top-40 index .JTOPI was last down 0.3%.

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