South Africa’s rand was stable on Friday after a volatile week in which it weakened over the last-minute postponement of the national budget but then recovered thanks to a softer dollar and buoyant global gold price.
At 0845 GMT, the rand traded at 18.33 against the dollar , not far from its previous close of 18.3225.
The national budget was delayed on Wednesday due to disagreements within the country’s coalition government over a proposal to hike value-added tax.
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Analysts said the postponement, unprecedented in the country’s post-apartheid history, meant weeks of uncertainty before a new budget is presented in mid-March.
The delay “highlights the risk that this grand coalition is an experiment that can go wrong at any time,” Commerzbank analyst Volkmar Baur said in a research note.
Andre Cilliers, a currency strategist at TreasuryONE, said markets would be looking to see whether the revised budget focuses on debt consolidation and expenditure cuts. If it does, the rand could strengthen, he said in another note.
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The U.S. dollar is near year-to-date lows, helping emerging market currencies such as the rand. Meanwhile, prices of gold, a major South African export, were on track for an eighth week of gains.
South Africa’s benchmark 2030 government bond was little changed in early deals, with the yield down 1 basis point at 9.18%.
