File: It is indeed the top decimal if not the top 5 percent or an even smaller fraction that drives inequality, and it is these haves that have grasped the steering wheel.
JOHANNESBURG - The rand was on a shaky ground on Tuesday afternoon‚ feeling the squeeze of a stronger dollar‚ which has been volatile since the start of 2018.
The rand’s moves were in sync with other emerging-market currencies‚ including the Turkish lira and Indian rupee.
The relative strength in the dollar came as United States (US) government bond yields climbed again‚ with the yield on the benchmark treasury paper touching its highest level in four years‚ at 2.90%.
Markets were also on tenterhooks before the Budget Speech on Wednesday‚ which analysts have cautioned could temper momentum created by the election of Cyril Ramaphosa as President.
“There is still scope for the rand to rally if the budget is able to balance out economic growth and fiscal consolidation‚” said Halen Bothma‚ economist at ETM Analytics.
Moody’s‚ which is the only major ratings agency that has South Africa’s credit rating at investment grade‚ is set to deliver its ratings review within days after the budget.
Any further downgrade by Moody’s will lead to universal junk status‚ as the country will be excluded from the Citi world government bond index‚ leading to the drop in the value of the rand.
Finance Minister Malusi Gigaba could announce increases in personal income taxes and VAT to attempt to plug the budget hole‚ which is estimated at R50.8bn.
At 3.01pm‚ the rand was at R11.7535 to the dollar from R11.6722‚ at R14.5063 to the euro from R14.4824‚ and at R16.4429 to the pound from R16.3405.
The euro was at $1.2341‚ from $1.2407.