South Africa’s rand slipped in early trade on Monday, as surging coronavirus cases in Europe and the United States and a lack of progress toward a U.S. stimulus package sapped risk appetite.
At 0650 GMT, the rand ZAR=D3 traded at 16.3000 versus the U.S. dollar, 0.68% weaker than its close on Friday.
The United States has recorded its highest ever number of new COVID-19 cases for two consecutive days and so has France, while Spain announced a new state of emergency and Italy has ordered restaurants and bars to shut by 6 p.m. to market uncertainty, U.S. House Speaker Nancy Pelosi said on Sunday that she expected a White House response on Monday regarding the latest stimulus spending plan, but there have been few tangible signs that a long-stalled deal is actually nearer. caution was witnessed in global markets in the overnight session as U.S. Congress remains at a stalemate, while the U.S. elections are just a week away,” said Bianca Botes, executive director at Peregrine Treasury Solutions.
The rand has in recent weeks mainly been driven by offshore sentiment, particularly the outlook for further monetary and fiscal stimulus for the world’s major economies.
Botes added that markets were also bracing for South Africa’s medium-term budget policy statement on Wednesday.
A Reuters poll showed that the country’s consolidated fiscal deficit was set to widen further than projected in June’s emergency COVID-19 budget as a third-quarter rebound in economic growth will not boost tax receipts enough. bonds also weakened, and the yield on the instrument due in 2030 ZAR2030= was up 5 basis points at 9.335%.