JOHANNESBURG (Reuters) – South Africa’s rand edged firmer against the dollar on Wednesday after pushing to its strongest level in 25 days in the previous session, as the currency was boosted by Chinese GDP data that came in stronger than market forecasts.
The local unit did, however, surrender some of its earlier gains as investors held their bets ahead of the finance minister’s medium-term budget review later in the day.
The rand has been unable to hold beyond a recent resistance level of 10.980, which it has failed to breach three times in the past three weeks.
At 0643 GMT, the rand inched 0.1 percent firmer versus the dollar to 11.0305 compared to its New York close, after racing to a 5-week record-high of 10.9725 in the previous session.
Analysts expect the rand to take direction from minister Nhlanhla Nene’s maiden budget speech at 1200 GMT, as well as inflation data scheduled for release 0800 GMT.
“Dips below 11.00 on USD/ZAR have not been sustained as the market awaits today’s key budget speech,” said John Cairns, an analyst at Rand Merchant Bank, in a note to clients.
Market-watchers expect Nene to reveal a budget deficit that has widened since February’s figure of 4.4 percent of gross domestic product.
“We do not expect any positive surprises, implying the rand should struggle to extend gains,” Cairns added.
Government bonds tracked the currency lower, with yields on the benchmark paper rising by 5 basis points to 8.015 percent.
