Picture: REUTERS
Picture: REUTERS

The rand was firmer on Wednesday morning and on track for its first day of gains this week while the currency’s volatility remained high as investors await the budget next week.

The rand’s one-week implied volatility was at its highest since November as investors await finance minister Tito Mboweni’s speech in parliament next Wednesday.

The budget is expected to provide clarity on whether the government will be able to rein in the budget deficit, a key factor in SA’s credit rating status.

“The budget will ultimately give a fresh perspective to the cyclical bias the rand will experience in the months ahead and is therefore important,” said Mercato Financial Services analyst Nico du Plessis. He said there was a risk that the budget “will not go far enough” to prevent a credit ratings downgrade by Moody’s Investors Service later in 2020.

At 11.15am, the rand had firmed 0.40% to R14.9456/$. It had strengthened 0.29% to R16.1511/€ and 0.53% to R19.4020/£. The euro was flat at $1.0806. 

Gold was up 0.43% to $1,608.21/oz and platinum 2.62% to R1,013.25. Brent crude added 0.78% to $58.10 a barrel.

While the rand was the best-performing currency among its emerging-market peers on Wednesday, it was still down more than 6% so far in 2020 as a gloomy domestic economic backdrop and concern about the economic effect of the coronavirus weigh on sentiment.

mjoo@businesslive.co.za