JOHANNESBURG, April 2 (Reuters) – The South African rand dropped sharply on Wednesday as a fractious budget vote threw into doubt the solidity of the coalition government.
At 1640 GMT, the rand traded at 18.7725 against the dollar ZAR=D3, about 1.4% weaker than Tuesday’s closing level.
While the budget’s fiscal framework and revenue proposals passed in Parliament, the second-biggest party in the coalition, the pro-business Democratic Alliance, voted against them and said it would challenge the outcome in court.
Finance Minister Enoch Godongwana said he did not think a party could vote against a budget and then be part of its implementation.
“The clear divide between the ANC and DA puts the state of the Government of National Unity in question,” said Shaun Murison, a senior market analyst at IG.
The African National Congress, the biggest party in the coalition, secured the backing of an assortment of smaller coalition partners and parties outside the coalition to get the legislation passed.
The Johannesburg Stock Exchange’s Top-40 index .JTOPI closed down 0.9% while the yield on the benchmark 2030 government bond ZAR2030= rose 21 basis points to 9.315%.
(Reporting by Sfundo Parakozov; Editing by Alexander Winning and Hugh Lawson)
