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Reports indicate that coalition partners are close to a budget agreement, resulting in a gain of the South African rand

Reports indicate that coalition partners are close to a budget agreement, resulting in a gain of the South African rand

Local news reported that the two largest political parties in the ruling government coalition were close to reaching an agreement which could end the impasse regarding the country's budget.

At 1240 GMT the rand was trading at 18.38 per dollar, a 0.3% increase over Friday's close. It had earlier traded up by more than 1%.

The rand's value has been volatile for several weeks as the African National Congress and Democratic Alliance have been negotiating over the budget impasse. The uncertainty has been exacerbated by the fear of U.S. president Donald Trump's proposed tariffs.

News24, a South African news site, reported Monday that ANC and DA are close to a budget agreement. Business Day also reported that a deal is close, after the DA made final amendments on Sunday to proposals for a contract.

A DA spokeswoman said that budget negotiations are continuing and the party is hopeful to reach a deal. A spokesperson for the ANC did not respond immediately to a comment request.

Last month, the budget was delayed due to disagreements among coalition partners about raising value added tax (VAT), from 15% to 21%. Finance Minister Enoch Goongwana then presented a revised version of the budget that included a 1-point increase in VAT spread over two-years.

The DA has also rejected the revised Budget, saying that it puts the future of government in danger. However, the DA and ANC continue to discuss behind the scenes.

On Wednesday, lawmakers will be examining the fiscal framework as well as revenue proposals related the budget.

The Top-40 Index on the Johannesburg Stock Exchange was down by 0.6% last.

The yield on South Africa's benchmark government bond for 2030 was lower by 5.5 basis points, to 9.1%. Reporting by Sfundo parakozov and Bhargav acharya; Editing and production by Alexander Winning and Philippa Fletcher

(source: Reuters)