UPDATE 2-South Africa's rand eases further on budget worries, stocks bounce
(Add quotes and update levels)JOHANNESBURG, Oct 25 (Reuters) - The South African randweakened further on Thursday, as investors were rattled by bleakmedium-term budget forecasts a day earlier and a strongerdollar, which dampened appetite for emerging markets globally.At 1500 GMT, the rand traded at 14.5800 versus thedollar, 0.19 percent weaker on the day after falling by around 2percent on Wednesday.
Finance Minister Tito Mboweni predicted wider budgetdeficits and cut growth forecasts in his medium-term budget onWednesday, laying bare the challenges he faces at a time ofrevenue shortfalls and ballooning debt. On Thursday, Mboweni called for urgent action to preventhigh debt levels forcing South Africa to seek help from theInternational Monetary Fund. "The risks in the budget were realised and the rand feltthat significantly. Mboweni provided a realistic view," saidAfrifocus Securities portfolio manager Cheslyn Francis.
The medium-term budget partly unsettled investors because offears that ratings agency Moody's could strip the country of itslast investment grade credit rating. "Moody's may be reluctant to downgrade but it's on the radarif issues aren't sorted out. It's not going to be a comfortableride for the rand," said Francis.Treasury One analyst Wichard Cilliers said the rand was alsodragged lower by a rally in the dollar, which saw the U.S. unithit a two-month high against a basket of currencies. In fixed income, the yield on the benchmark government bonddue in 2026 rose 7 basis points to 9.370 percent.Stocks rose, helped by technical factors after a recentsell-off pushed the main indices into oversold territory,according to momentum indicators tracked by analysts.The benchmark Top-40 index climbed 1.67 percent to45,416.62 while the wider All-share index added 1.47percent to 51,624.86. (Reporting by Nomvelo Chalumbira and Ed StoddardEditing by Joe Brock)
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