Zaakirah Ismail, analyst at Standard Bank Ltd: “The medium-term budget policy statement will likely overshadow local data releases and will be significant for both rand and bond movements. If the medium-term budget policy statement is as benign as we expect, and if Moody\u2019s preserves South Africa\u2019s credit rating and the stable outlook this year, it should provide relief to the bond market.”<\/p>\n
Mehul Daya and Neels Heyneke, analysts at Nedbank: The MTBPS “will provide a short-term catalyst for the rand to strengthen, as our estimates point to small but limited fiscal slippage in the near term since the pace of revenue collection has picked up.”<\/p>\n
“The rand should be supported by local fundamentals and positive investor sentiment; hence we favor a move to R14.20, with the possibility of targeting R13.90\u201d per dollar, provided the external environment doesn\u2019t deteriorate.”<\/p>\n
Gordon Kerr, trader at FirstRand Bank: “I think the biggest question mark is around issuance. If that comes out reasonable, bonds have every chance of rallying.”<\/p>\n
Lukman Otunuga, research analyst at FXTM: “This could be an explosively volatile trading week for the South African markets as anticipation mounts ahead of the medium-term budget policy statement.<\/p>\n
“A gloomy statement is likely to translate to rand weakness and losses on the JSE. USD\/ZAR is likely to challenge R14.20 in the near term amid dollar weakness.”<\/p>\n
Luis Costa, head of CEEMEA strategy at Citigroup: “We believe the rand will likely trade well this week, as a market response to a neutral budget statement and the possible announcement of further infrastructure spending international pledges by foreign states.”<\/p>\n
Citigroup initiated a short dollar-rand trade via three-month forwards, anticipating a rally in South Africa\u2019s currency to R13.60 per dollar.<\/p>\n
Sebastien Barbe, head of emerging-market research and strategy at Credit Agricole SA: “A slight slippage of the government finance is expected as the government tries to stimulate economic growth. The question is whether the slippage will be narrow enough to keep Moody\u2019s comfortable with the country\u2019s current rating.<\/p>\n
“The recent quick replacement of Nene by Mboweni as Minister of Finance suggests the government wants to remain market friendly. This suggests the budget plan may also try to accommodate the markets\u2019 expectations.”<\/p>\n
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