At 09h38 CAT, the Rand traded at 18.60 against the Dollar, up about 0.5% on Wednesday's closing level.

The VAT hike has caused political wrangling for weeks, exposing deep rifts between the African National Congress (ANC) and the Democratic Alliance (DA) in the ruling coalition government.

The DA, which is the second-biggest party in the coalition, went to court to challenge the tax increase and voted against the fiscal framework in parliament because of it.

Financial market fears that the DA could leave the coalition were one factor behind the rand's slump to a record low this month, the other being risk aversion over United States President Donald Trump's tariffs.

"Ultimately, an embarrassingly poor budget process met the new constraints of a weakened ANC. But, ANC/DA relations (are) now tense as new financing options (are) still unknown," Daniel Silke, Director of the Political Futures Consultancy, said in a post on X.

--Reuters--