On the South African budget release....>

SOUTH AFRICA: On the South African budget release today, Citi write that they

prefer to trade the reaction rather than hold positions heading into release.

Citi see the market as positioned slightly long USD as a partial hedge against a

poor budget release, but more importantly, in line with general risk aversion

and coronavirus concerns. They add that even if the budget today is 'good news',

they doubt this would change the short to medium term direction to the stronger

side for the ZAR.

They see it as possible that some short term longs are squeezed back below

15.00, but 14.95-14.75 remains attractive for importers and should be used an as

opportunity to buy USD.

Four elements of the budget today that Citi are looking out for:

- A clear message on public service wage freezes (likely targeting top earners)

- Budget deficit needs to be below the 6.7% mark, preferably below 6.5%

- Beleaguered utility Eskom needs a solid plan.

- Finance Minister should be to the point - this is exactly what the market

needs to gain some confidence and avoid a downgrade.