Rand & S. African Bonds Advance, Fiscal Chatter In Focus Ahead Of Next Week's Budget Speech

Spot USD/ZAR has extended losses after the release of U.S. CPI, with the greenback side of the pair largely driving price action today. The rate remains volatile and last deals at ZAR17.6990, some 1,575 pips lower on the day. Local-currency bonds have kept pushing higher, 10-year breakeven inflation rate faltering past the 6% mark.

• Trade union Solidarity has taken legal action against the state of disaster declared by President Cyril Ramaphosa to deal with the ongoing energy crisis. Ramaphosa has since declared another state of disaster in response to widespread flooding.
• Fiscal chatter is doing the rounds ahead of next Wednesday's budget speech. RMB Morgan Stanley said that the government will probably take on ZAR140bn of Eskom's debt in FY2023/24, followed by another ZAR50bn and ZAR30bn respectively in the next two years (ZAR220bn overall). Separately, NBP Paribas said they expect the government to assume ZAR200-250bn of Eskom debt in equal proportions across FY2023/24 and FY2024/25. This comes after Absa said last week that they consider it unlikely that the full debt-relief plan for Eskom will be announced in the budget this month amid ongoing disputes on the conditions attached to the funding.