The Rand weakened against the US Dollar on Thursday morning due to investor concerns over the South African government’s ability to finance a wide budget deficit with a weakening economy.
Yesterday saw Finance minister Pravin Gordhan address parliament to lay out his three-year budget plan. The minister said that the deficit for 2013 would b 4.6% of GDP, wider than his previous prediction. Despite the deficit gap Gordhan said that he was delaying his plans to narrow the budget deficit in order to promote growth in the economy.
“The deterioration in the budget balance is significantly worse than we had anticipated,” Carmen Nel, a Cape Town-based analyst at Rand Merchant Bank, said in e-mailed comments. “The finance minister indicated that the government is comfortable with the Rand at current levels.”
The Rand is also under pressure due to the rising possibility that credit ratings agencies Moody’s, Fitch and Standard and Poor are lining up to cut South Africa’s credit rating further. They are concerned by the slowing economy and the rise in spending pressures.
“In recent times, we have found a balance, where you don’t hear public noise about the currency issues and people begin to understand the negative effects on fuel prices,” Gordhan said in an interview in Cape Town after giving his budget speech yesterday. “We can live with it. The key is still the volatility question.”
So far this year the Rand has weakened by 4.3% against the US Dollar making it the worst performer among emerging markets.
Current ZAR Exchange Rates
The South African Rand to Euro exchange rate is currently trading at 0.0861
The South African Rand to US Dollar exchange rate is currently trading at 0.1130
The South African Rand to Pound Sterling exchange rate is currently trading at 0.0745
The South African Rand to Australian Dollar exchange rate is currently trading at 0.1100
The South African Rand to New Zealand Dollar exchange rate is currently trading at 0.1359
The South African Rand to Canadian Dollar exchange rate is currently trading at 0.1155
These exchange rates were correct as of 10:55 pm GMT
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