Rand Advances Amid Greenback Weakness

Spot USD/ZAR took a hit as Finance Minister Enoch Godongwana delivered FY2024/25 Budget yesterday but clawed back losses during the remainder of the session. Fresh selling pressure appeared this morning, seemingly as a function of greenback weakness (BBDXY -0.3%) amid positive risk sentiment. The pair currently sits at 18.8383, down 822 pips on the day, with bears eyeing support from Feb 2/Jan 12 lows of 18.5578/18.5385. Conversely, bulls look for a rebound above Feb 14/Jan 22 highs of 19.1912/19.2180.

• Godongwana confirmed that the government will draw ZAR150bn from the proceeds on the GFECRA to reduce borrowing over the next three years. Speaking this morning, he said that the fiscal plan was not designed to lure voters during the election year, while the priority is to fix power and logistics problems.
• The rand has shown little reaction to another flare-up in loadshedding, with Eskom currently running Stage 4 power cuts due to unexpected outages of five generating units.
• The composite BBG Commodity Index has added 0.3%, with the precious metals subindex up 0.7% at typing.
• SAGB curve runs steeper, yields are a tad higher. South Africa's 10-year breakeven inflation rate has ticked higher to 6.34%.