After closing at a record high on Monday, the JSE tracked slightly weaker in morning trading, as SA investors await Wednesday’s medium-term budget policy statement (MTBPS), which will provide important updates on the country’s spending priorities, growth outlook and fiscal policy.
TreasuryOne currency strategist Andre Cilliers said investors were focused on if finance minister Enoch Godongwana would emphasise fiscal responsibility, encourage private sector involvement in capital project, and signal reform to strengthen SA’s fiscal position.
“While the MTBPS typically doesn’t involve policy shifts, any signal of credible fiscal reforms could improve investor sentiment and support the rand,” said Cilliers.
Godongwana may also address the speculation that the Treasury is considering lowering its inflation target — a move that Reserve Bank governor Lesetja Kganyago has advocated for in recent months.
“Although a formal decision may wait until the main budget in February, mention of this shift would align SA with global standards and support rand stability by promoting long-term price stability,” said Cilliers.
“Governor Kganyago has emphasised that credible reforms would attract foreign capital, appreciating the rand, reducing inflation and allowing the Bank to ease interest rates further.”
At 10.40am, the rand was stable at R17.6758/$, R19.1004/€ and R22.95264/£, reflecting investors’ caution ahead of the MTBPS.
A Russian media company had reported that SA and Russia would be deepening their military ties, which caused the rand to lose some ground; however, a lack of further clarification beyond the headline enabled the rand to drift back to its stable position.
In commodities markets, gold was trading 0.34% stronger at $2,751.30/oz, with platinum up 1.76%, silver up 1.24% and palladium up 2.15%. Brent crude lost 0.2% to $71.49 a barrel.
The JSE all share was down 0.46%, with the top 40 index down 0.49% as losses were seen across the sector indices, except for retailers, food producers and personal care, drug and grocery stores.
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