(3 Minutes Read)
The rand weakened along with its emerging market peers as investors considered the prospect of delayed interest rate cuts by the Federal Reserve of the US
The South African Treasury has hinted that it could look to lower the country’s inflation target to make the economy more competitive and ease the pressure on the rand.
The Treasury has also urged the Reserve Bank to be more upfront about the effect of fiscal policy on inflation as technical work had begun at the appropriate level for an inflation target benchmarked either in a band or a point. In the meantime, the rand weakened along with its emerging market peers as investors considered the prospect of delayed interest rate cuts by the Federal Reserve of the US.
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The local currency fell more than 1% in intraday trade for the second session running, touching its worst level in more than four months. The weakness was largely attributed to a strong dollar rather than any local factors. To address the high inflation and pent-up inflationary pressure, Finance Minister Enoch Godongwana unveiled the 2024 national budget against the backdrop of a critical election year for striking a delicate equilibrium between sustaining social expenditure and enforcing fiscal discipline. Analysts still feel that it is a daunting task given the multiple challenges being faced by the economy stemming from domestic currency value erosion, energy crisis, and lackluster inflow of investments.
