This afternoon, Finance Minister Godongwana will unveil the revised budget, marking the second round of deliberations as investors keenly await insights into South Africa’s fiscal direction. Details of the budget have remained tightly guarded, with no leaks emerging thus far. However, it is clear that the DA staunchly opposed a VAT hike, compelling authorities to explore alternative strategies—primarily expenditure reductions—to address the deficit.

Today’s announcement will reveal the DA’s negotiating prowess within the GNU and whether their stance has influenced policy. Some news headlines suggest a lack of consensus, hinting that the budget will proceed as scheduled, with specifics to be refined later in parliament. This inaugural GNU budget offers investors a lens into how internal dynamics have tested ANC ideology. The ANC, now unable to unilaterally dictate policy, faces heightened accountability—a shift welcomed by voters.

Investors hope this budget not only consolidates debt but also reassures rating agencies, long critical of South Africa’s fiscal decline, with a credible growth-oriented vision. With this in mind, privatising state assets could unlock capital, shareholder scrutiny, and merit-based governance, driving efficiency across strategic sectors. Success here could alleviate unfunded liabilities, bolster the tax base, and spur growth.

ZAR Markets

All eyes will be on the budget today. Investors are closely assessing the resilience and effectiveness of the GNU. They would interpret any additional interruptions to the budget process as a sign of dysfunction within the GNU, potentially undermining confidence in its ability to deliver on growth and fiscal reform objectives. Ahead of the budget, the ZAR is struggling to capitalise on USD weakness, trading between 18.2500-18.3000 this morning. Concerns linger that the budget may lack a credible fix for South Africa’s fiscal path, with higher taxes risking further economic stagnation. Meanwhile, global stock sell-offs and a faltering US growth outlook, worsened by Trump’s trade tactics, are adding some pressure. For now, US exceptionalism is eroding, and the USD is under some pressure. However, only if SA can deliver a credible budget will the ZAR take full advantage of the USD’s recent performance.

Global FX Markets

The U.S. dollar remained near a five-month low against major currencies, pressured by concerns over the U.S. economy amid President Donald Trump’s erratic trade policies. The euro stayed near a five-month high, buoyed by optimism for a potential 30-day ceasefire in Ukraine, proposed by the U.S. and accepted by Ukraine on Tuesday, alongside Germany’s planned fiscal spending, though complicated by the Greens’ opposition. The Canadian dollar saw volatility after Trump briefly threatened 50% tariffs on steel and aluminum before retracting, with the Bank of Canada expected to cut rates by a quarter-point on today. The U.S. dollar index touched an intra-day low of 103.43 before recovering marginally as the EU open beckons. Weak U.S. economic data, including a third consecutive month of declining small-business confidence in February, heightened focus on the upcoming consumer price index (CPI) release, which could amplify volatility. The market is certainly considering a “lose-lose” CPI outcome: high readings fuelling stagflation fears, or low readings reinforcing recession concerns