FX.co ★ South Africa 10-Year Bond Yield Hits Fresh 2021-Lows

South Africa's 10-year government bond yield has declined further, dropping below 8.60%— a level not observed since February 2021. This shift underscores the country's growing attractiveness to investors, driven by enhanced economic and fiscal dynamics. Finance Minister Enoch Godongwana delivered an optimistic and credible budget, underlining the government's dedication to fiscal discipline and economic reform. Moreover, the introduction of a new 3% inflation target aims to stabilize prices at lower levels, thus enhancing the credibility of monetary policy. This move also sets the stage for reduced interest rates, supporting sustainable long-term growth. Additionally, Godongwana emphasized the necessity of ongoing structural reforms, unveiling extensive infrastructure and investment initiatives. South African assets have shown strong performance this year, buoyed by advances in fiscal consolidation, governmental stability, and structural improvements such as more reliable electricity supply and increased infrastructure investment.