Feb. 15 (Bloomberg) -- The rand declined for the first time in three days, paring its advance this week, after President Jacob Zuma said he will review mining royalties as he comes under pressure to reduce poverty and inequality.
South Africa’s currency slipped 0.5 percent to 8.8302 per dollar by 3:42 p.m. in Johannesburg, cutting its gain this week to 0.6 percent. Yields on benchmark 10.5 percent bonds due December 2026 dropped 5 basis points, or 0.05 percentage point, to 7.29 percent. The yield is down two basis points this week.
Finance Minister Pravin Gordhan will commission a study of current tax policies later this year, Zuma, 70, told lawmakers in his State of the Nation speech in Cape Town yesterday. The review is “to make sure that we have an appropriate revenue base to support public spending,” he said.
“The statement was not nearly as business-friendly as hoped,” Carmen Nel, a Cape Town-based analyst at Rand Merchant Bank, said in e-mailed comments. “The statement left us feeling a bit more bearish on bonds in the longer term.”
Investor confidence has dropped after a series of mining strikes and the shooting of about 34 protesters by police at Lonmin Plc’s Marikana platinum mine last year, with the price of insuring South Africa’s dollar debt against default using credit default swaps rising to an eight-month high on Feb. 4.
Foreign investors sold a net 171 million rand ($19 million) of South African bonds yesterday, bringing total net sales in the first four days of the week to 251 million rand, according to JSE Ltd. data.
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