Investors are giving South Africa’s coalition government some leeway to get its finances in order, but the rising cost of hedging against rand declines shows pressure is building after last week’s disappointing budget update. On October 30, when Finance Minister Enoch Godongwana presented his mid-term budget statement, an implied volatility measure for the dollar-rand exchange rate jumped the most since August, and it’s continued to rise over the past six days, reaching the highest level in six months. A similar gauge for emerging-market currencies has declined over the same period.
