South Africa's rand weakened against the dollar on Tuesday after the government said it was not thinking about using reserves to manipulate its value, while comments that the Treasury will not issue new debt boosted government bonds.
The rand was last at 7.9075 to the dollar after falling to 7.9160 from 7.8630 before Finance Minister Pravin Gordhan began a medium-term budget policy statement to parliament around 1202 GMT.
The yield on the 2015 bond fell to 6.655 percent from 6.71 percent after the Treasury said it would not issue new bonds or increase the size of its weekly government debt auctions despite an increased borrowing need for the fiscal year to end-March
In its three-year budget outlook, the Treasury projected a shortfall of 166.6 billion rand from 157.9 billion rand initially forecast in February, but said it would finance the gap by switching maturing bonds to longer-dated paper and draw on available cash balances.
The longer end of the curve in particular has come under pressure in recent days as investors anticipated the government could flog more debt to the market.
The rand fell sharply in September, hitting a 28-month low against the dollar in September mostly on global risk aversion linked to debt worries in the euro zone.
But on Tuesday Treasury Director General Lungisa Fuzile said the currency was expected to stabilise at stronger levels than seen at present and the government was not thinking about using reserves to manipulate its value.