Rand slumps as government expects wider budget deficit
The rand broke through R15/$ for the first time in two weeks
The rand had its biggest drop in nearly 14 months and bonds slumped after finance minister Tito Mboweni unveiled a medium-term budget policy statement (MTBPS) that laid bare the costs to the country of Eskom’s bailouts.
The rand dropped 2.59% on Wednesday, its biggest fall since September 2018, pushing it through the R15/$ level for the first time since October 10. Yields on the country’s 10-year bond yields, which move inversely to the price, increased to the highest in more than two months as some analysts said the budget made a Moody’s Investors Service change to the country’s rating outlook from stable to negative all but inevitable.