The rand weakened by 30c or 2% against the dollar on Wednesday afternoon after Finance Minister Tito Mboweni delivered his medium-term budget framework.
The rand has been treading water against the dollar from early on, trading around R14.60. After Mboweni started his speech just after 14:00, the rand of R14.61 reversed to weaken by 2% to R14.92 in about forty minutes.
This is the worst in two weeks.
The reason for the deterioration is because the budget deficit is larger than expected, as is the level of government debt in relation to GDP.
Nedbank said in a statement: “It is difficult to see how the rating agencies will have an optimistic view of the country if there are no significant changes.”
“The government’s finances are clearly on an unsustainable path, and the only option is much better control over spending and much better economic growth.”