October 26, 2018 / 7:26 AM / 22 days ago

South Africa's rand firms as dollar rally pauses, stocks down

JOHANNESBURG, Oct 26 (Reuters) - South Africa’s rand firmed early on Friday against a softer dollar, as investor appetite for riskier assets was boosted after the market digested news of the bleak medium-term budget.

* The rand was 0.41 percent stronger at 14.5600 per dollar at 0720 GMT, having closed in New York at 14.6200.

* The currency is expected to trade between 14.4500 and 14.8000 to the dollar, NKC African Economics wrote in a note.

* Finance Minister Tito Mboweni predicted wider budget deficits and cut growth forecasts in his medium-term budget on Wednesday, laying bare the challenges he faces at a time of revenue shortfalls and ballooning debt.

* The rand remained under pressure as the medium-term budget sparked fears that ratings agency Moody’s could strip the country of its last investment grade credit rating.

* In fixed income, the yield on the benchmark government bond due in 2026 was up 0.5 basis points to 9.375 percent.

* On the stock market, the Top-40 index was down 1.01 percent while the broader all-share fell 0.76 percent in early trade. (Reporting by Nomvelo Chalumbira Editing by James Macharia)

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