{"id":114104,"date":"2016-02-24T15:09:14","date_gmt":"2016-02-24T13:09:14","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=114104"},"modified":"2016-02-24T19:24:26","modified_gmt":"2016-02-24T17:24:26","slug":"rand-takes-a-hit-after-budget-speech","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/trending\/114104\/rand-takes-a-hit-after-budget-speech\/","title":{"rendered":"Rand takes a hit after budget speech"},"content":{"rendered":"

Finance Minister Pravin Gordhan has delivered his 2016 budget speech to Parliament<\/a><\/strong>, after which the rand weakened from R15.23 to R15.58 against the US Dollar.<\/p>\n

Gordhan\u2019s first budget after his return was relatively calm and workmanlike, after expectations of tax hikes and spending cuts amid tough economic times.<\/p>\n

He stressed the need to reaffirm the government\u2019s commitment to close the gap between spending and revenue, implementing a plan for stronger economic growth and cooperation between government and the business sector.<\/p>\n

Not everyone was convinced that the 2016 budget will strengthen the economic position in South Africa, though, and the rand weakened immediately after Gordhan\u2019s budget was published.<\/p>\n

Some commentators highlighted that the weaker rand was not only caused by Gordhan\u2019s budget speech, but also by Moody\u2019s decision<\/a><\/strong> to cut Brazil\u2019s sovereign rating to junk.<\/p>\n

Analysts and economists comment on weaker rand<\/h3>\n

The currency started the day somewhat firmer at R15.21\/$, but gradually ran out of steam, dipping to as low as R15.66 by 16:17 earlier this afternoon. It also traded lower against other major currencies \u2013 at R17.11\/\u20ac and R21.69\/\u00a3.<\/p>\n

TreasuryOne felt that<\/strong><\/a> the rand\u2019s almost 3% decline in daily trade was mainly as a result of Moody\u2019s downgrading of Brazil, which it believes will record average negative growth for the next three years.<\/p>\n

However, most analysts and economists felt the rand\u2019s depreciation signalled a negative interpretation of Gordhan\u2019s budget.<\/p>\n

South Africa is also facing a downgrade to junk status, which happens when a ratings agency downgrades a country\u2019s bonds to non-investment grade.<\/p>\n

NKC analyst Bart Stemmet said Gordhan did not do enough to stave off a rating downgrade to junk bond status in the coming months.<\/p>\n

\u201cThe steep exchange rate depreciation shortly after the budget was released suggests that the market agrees,\u201d said Stemmet.<\/p>\n

Overberg Asset Management director Brett Birkenstock said the markets are \u201cquestioning whether Gordhan has done or been allowed to do enough to avoid a downgrade\u201d.<\/p>\n

The graph below shows the rand vs the US dollar on 24 February.<\/p>\n

\"rand

Rand vs Dollar, 24 Feb 2016<\/p><\/div>\n

More on the rand<\/h3>\n

The real value of the rand<\/a><\/strong><\/p>\n

Rand eyes R15 to the dollar<\/a><\/strong><\/p>\n

Rand finds some new strength against the dollar<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Finance Minister Pravin Gordhan has delivered his 2016 budget speech to Parliament, after which the rand weakened against the US Dollar.<\/p>\n","protected":false},"author":31,"featured_media":28250,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[26,3670],"class_list":["post-114104","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-trending","tag-headline","tag-rand"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/114104","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/31"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=114104"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/114104\/revisions"}],"predecessor-version":[{"id":114152,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/114104\/revisions\/114152"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/28250"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=114104"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=114104"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=114104"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}