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South Africa’s rand ekes out gains on short-covering ahead of budget speech

South Africa’s rand ekes out gains on short-covering ahead of budget speech

JOHANNESBURG:  South Africa’s rand inched firmer early on Thursday, helped by some investors taking profits from the dollar’s recent rally and short covering triggered by the currency approaching technical support levels. At 0630 GMT the rand was 0.1 percent firmer at 13.5675 per dollar compared to an overnight close of 13.5775 in New York.

A combination of a firmer dollar, higher-than-expected inflation print and negative sentiment spurred by recent cabinet changes had pushed the rand to its weakest in nearly a week towards short term technical support around the 13.60 mark. No data due in the session, so traders look ahead to treasury’s medium-term budget on Oct. 25. A Reuters poll on Thursday expects Finance Minister Malusi Gigaba to announce a revenue shortfall of 40 billion rand ($3.0 billion) due to poor tax receipts, likely pushing the budget deficit to 3.9 percent of GDP from 3.4 percent estimate. Stocks were set to open flat at 0700 GMT, with the JSE securities exchange’s Top-40 futures index down 0.05 percent. In fixed income, the yield on the benchmark government bond due in 2026 was up 3.5 basis points at 8.805 percent.