South Africa's rand falls as positive sentiment after Moody's decision fades - CNBC Africa

South Africa's rand falls as positive sentiment after Moody's decision fades

Southern Africa

by Reuters 0

South Africa's rand falls as positive sentiment after Moody's decision fades. Photo: Pixabay.

South Africa's rand gave up its strong gains early on Monday as momentum spurred by Moody's decision not to downgrade the country's credit rating faded, giving way to nagging concerns about the economy.

Earlier the rand had gained up to 14.7400 but retraced its steps to trade 0.44 percent weaker at 14.9300 per dollar by 0740 GMT.

The rand had bounced back from the previous week's one month low of 15.1800 and was on the front foot in early trade, with some traders earmarking the unit to test resistance around 14.7500 if the positive momentum held.

The overnight rally in oil and the positive start in equities gave an early push to the rand, currency trader at Standard Bank Warrick Butler in a note.

Government bonds were firmer, with the benchmark issue due in 2026 cut 9.5 basis points to 9.035 percent.

"We've seen some very volatile trade this morning and it's hard to say whether the rand is being driven by flows or by sentiment," said chief trader at WWC Securities Marten Banninga.

"Some guys have read differently into the Moody's statement. Sentiment is still uncertain and the reality of a downgrade by either Fitch or S&P's is still there."

Moody's left its rating of South Africa's debt at Baa2, two levels above subinvestment grade, but assigned a negative outlook, saying that risks to implementation of structural and fiscal reforms remained a factor.

Fitch and Standard & Poor's have the country just one notch above subinvestment grade, and are due to make their decisions in June.

The rand had firmed on Friday after weaker-than-anticipated jobs data from the United States on Friday fuelled bets that the Federal Reserve would push back an interest rate hike.

On the stock market, the Top-40 index was up 0.37 percent at 45,270 points.

 

(Reporting by Mfuneko Toyana; Editing by James Macharia)

Comments