JOHANNESBURG (Reuters) -The South African rand maintained early gains on Wednesday after a key parliamentary committee backed the long-delayed national budget, which has been tied up in political wrangling for months.
At 1448 GMT, the rand traded at 17.7875 against the dollar, about 0.4% stronger than Tuesday’s closing level.
A majority of members on the Standing Committee on Finance supported the budget’s fiscal framework and revenue proposals, clearing the path for a vote in the lower house of parliament on June 11.
The budget has had to be revised twice because of disagreements in the ruling coalition.
But its path now looks clear after the finance minister backtracked on its most contentious element, raising value-added tax, and the second-biggest party in the multi-party government welcomed a third version.
Johann Els, chief economist at Old Mutual, said he expected more rand strength in the short-term given there was less uncertainty over the budget.
Casparus Treurnicht, portfolio manager at Gryphon Asset Management, said there was a sense of certainty in local politics which was favourable for the rand.
The positive sentiment prevailed following mixed economic data.
A purchasing managers’ index survey on Wednesday showed business activity grew at its fastest pace in four years in May, but gross domestic product data on Tuesday pointed to stagnation in the first quarter.
The Johannesburg Stock Exchange’s Top-40 index was last up about 0.9%.
The benchmark 2035 government bond price rose, with the yield falling 11 basis points to 10.00%.
(Reporting by Sfundo Parakozov and Alessandro Parodi; Editing by Alexander Winning and Emelia Sithole-Matarise)
