JOHANNESBURG, April 25 (Reuters) – South Africa’s rand was steady on Friday as investors awaited clarity on a disputed national budget which has roiled domestic markets.
At 1236 GMT, the rand traded at 18.8125 against the dollar, near its Wednesday closing level of 18.81.
South Africa’s biggest political parties have clashed over a proposal to raise the value-added tax rate by 1 percentage point over the next two years.
The VAT increase was withdrawn on Thursday and domestic-focused investors are awaiting details on the next steps in the budget process.
“The scrapping of the VAT increase and the subsequent questions on where Treasury is going to find the shortfall in the budget has put the rand under some renewed pressure,” said Andre Cilliers, currency strategist at TreasuryONE.
Like other risk-sensitive currencies, the rand often takes its cue from global factors and domestic drivers.
In addition to the budget dispute, the rand has experienced bouts of volatility linked to uncertainty over U.S. President Donald Trump’s tariff plans.
South Africa’s President Cyril Ramaphosa said on Thursday he had spoken to Trump and discussed fostering good relations between the two countries, which have soured since Trump took office in January.
On the stock market, both the Top-40 index and the broader all-share index were last trading about 0.7% higher.
South Africa’s benchmark 2030 government bond was also stronger, with the yield down 4 basis points at 8.83%.
(Reporting by Tannur Anders, Sfundo Parakozov and Bhargav Acharya; Editing by Jacqueline Wong and Susan Fenton)
