The rand and local bonds held steady at reasonably strong levels on Wednesday morning, signalling a degree of market optimism that new finance minister Tito Mboweni will say what the market wants to hear when he presents his medium-term budget policy statement (MTBPS) in the afternoon. Mboweni will have the unenviable task of reassuring the ratings agencies and the markets that the country has a good handle of its finances, namely keeping the budget deficit within reasonable limits and sticking to the spending limit. Rand Merchant Bank analyst Nema Ramkhelawan-Bhana said the rand could rally through R14.20 to the dollar, pulling local bonds along with it, if the budget hits the right notes. “But, the devil is obviously in the detail and any indication of a wider than 4% deficit or disagreeable remarks on SOEs [state-owned enterprises] and potential funding mechanisms could lead the rand in the opposite direction.” The rand and local bonds were little shaken by the bout of volatility...

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