© Reuters. A South African Rand is seen in this illustration picture taken November 5, 2020. REUTERS/Mike Hutchings/Illustration
JOHANNESBURG (Reuters) -The South African rand weakened on Friday, extending the previous day’s losses to hit its lowest level since October, with analysts citing the impact of this week’s 2024 budget on investor sentiment.
At 1512 GMT, the rand traded at 19.3650 against the U.S. dollar, almost 1% weaker than its previous close.
The was up about 0.03%.
The rand initially strengthened after the finance minister’s budget presentation on Wednesday, but the gains were short-lived.
The minister announced that the government would draw down 150 billion rand ($7.8 billion) from contingency reserves at the central bank over the next three years to limit rising debt, but he offered little in the way of broad structural reforms to fix problems such as high unemployment and stagnant economic growth.
“Once everyone has had a chance to dissect the data and assess it for what it is, it is not surprising to see the general reaction and narrative turn negative,” ETM Analytics said in a research note.
The dollar, meanwhile, was supported by a senior U.S. Federal Reserve official saying that the central bank should be in no rush to reduce interest rates, which also contributed to the rand’s weakness, ETM added.
South Africa has elections on May 29 in which the governing African National Congress (ANC) party is widely predicted to lose its parliamentary majority for the first time in 30 years, which analysts say has made some investors cautious.
On the stock market, the Top-40 index closed 0.2% higher.
The benchmark 2030 government bond was weaker, with the yield up 13 basis points at 10.135%.