South Africa's coalition government is under increasing pressure due to the rising cost of hedging against the rand following a disappointing mid-term budget update.

Finance Minister Enoch Godongwana's presentation on October 30 caused a significant increase in implied volatility for the dollar-rand exchange rate, the largest since August. This volatility has continued to rise in the days after the budget announcement, reaching its highest level in six months.

In contrast, a similar measure for emerging-market currencies has shown a decline during the same period, highlighting the unique challenges faced by South Africa's financial landscape. Investors are closely monitoring the government's efforts to stabilize the economy amid concerns about fiscal management.