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Africa, Forex

South African rand steadies in early trade

JOHANNESBURG (Reuters) – South Africa’s rand steadied on Friday after weakening a day earlier when President Cyril Ramaphosa unveiled an economic recovery plan that raised questions from analysts about how it will be financed.

At 0655 GMT, the rand traded at 16.6500 versus the U.S. dollar, unchanged from its previous close. It weakened by around 0.7% in South African trade on Thursday.

Ramaphosa said on Thursday South Africa will embark on a massive public works and job-creation drive in response to the coronavirus crisis to return Africa’s most industrialised economy to growth.

“The rand reacted cautiously to the announcement as central issues also regarding the financing and the development of public finances had been left open,” Commerzbank emerging market analyst Elisabeth Andreae said in a note.

“Without credible finance many of the promising projects might evaporate. The Minister of Finance and his team are likely to be facing two tough weeks. And rand investors should not expect any miracles.”

Finance Minister Tito Mboweni will lay out spending plans at a mid-term budget on Oct. 28.

Government bonds weakened in early deals, and the yield on the instrument due in 2030 was up 1.5 basis points at 9.43%.

(Reporting by Olivia Kumwenda-Mtambo; Editing by Susan Fenton)

FILE PHOTO: South African Finance Minister Tito Mboweni gestures as he delivers his Budget Speech at Parliament in Cape Town

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