The rand touched a three-year high against the dollar in morning trade on Monday, amid reports that president Cyril Ramaphosa could announce a new cabinet this week.
Ramaphosa is expected announce a cabinet reshuffle in the next week, according to a report by the Mail & Guardian, with some dramatic changes beyond simply shuffling out his predecessor’s troublemakers.
The local unit hit 11.51/dollar earlier in the session, its firmest since February 2015. By 09h45, the rand traded at the following levels against the major currencies:
- Dollar/Rand: 11.52 (-0.19%)
- Pound/Rand: R16.16 (0.42%)
- Euro/Rand: R14.20 (-0.00%)
Markets are likely to have continued to react to what was a well received budget speech, which could see the clountry avoid a Moody’s Q1 2018 downgrade.
Fitch meanwhile, said on Friday that South Africa’s budget reverses some of last year’s fiscal deterioration, although it warned that poor finances of state-owned companies remain a major risk to fiscal targets.
Treasury said on Wednesday last week that value-added tax would be raised for the first time in 25 years, as part of efforts to cut the deficit and stabilise debt. “This would represent a partial reversal of recent fiscal deterioration,” Fitch said in a statement.
“Nevertheless, fiscal targets are subject to substantial risks, the largest of which stems from state-owned enterprises, notably the electricity company Eskom, whose medium-term finances are under pressure.”