Market News

BY Sfundo Parakozov

JOHANNESBURG, April 1 (Reuters) – The South African rand weakened early on Tuesday as negotiations between coalition partners over the deadlocked budget dragged on, hours before a key parliamentary committee was set to debate it.

Local news reports had said on Monday that the two biggest political parties in the coalition, the African National Congress (ANC) and the Democratic Alliance (DA), were close to a deal to pass the budget.

But on Tuesday the DA’s leader said a deal had not yet been reached and his party would oppose the budget until there was a written agreement.

The ANC’s chief whip said his party was optimistic it had “sufficient consensus” to pass the first parliamentary hurdle for the budget, the consideration of the fiscal framework by parliament’s Standing Committee on Finance on Tuesday.

At 0655 GMT, the rand traded at 18.36 against the dollar, 0.2% weaker than its previous close. It had gained ground on Monday on the reports that the ANC and DA were nearing a deal.

Trade in the rand tends to be highly volatile when there are major local drivers like the budget wrangling or global risk events.

Domestic economic data releases on Tuesday include a purchasing managers’ index survey for the manufacturing sector, set to be published at 0900 GMT.

The benchmark 2030 government bond was marginally stronger in early deals, the yield down 1.5 basis points to 9.08%.

(Reporting by Sfundo Parakozov; Editing by Alexander Winning and Andrew Heavens)