Rand touches 11-week low on downgrade fears

Johannesburg - The rand extended losses against the dollar early on Thursday, touching an 11-week low in cautious trade a day ahead of a ratings update by Fitch.

At 08:42 the rand was trading 0.6% weaker at R12.3830/$ from its New York closing level on Wednesday. The currency is trading at its weakest levels since March 18, according to Thomson Reuters data.

"Mounting fears that South Africa could be downgraded by Fitch rating later in the week help explain the rand's relative underperformance," Barclays Africa said in a note.

"... We believe the weakening bias will continue today as participants eagerly wait the outcome of tomorrow’s US employment report and the Fitch review."

Fitch held its BBB rating for South Africa last December.

The US non-farm payrolls report will provide a pointer as to when the Federal Reserve might raise interest rates.

Local government bonds weakened with the rand and the yield for the benchmark due in 2026 was up 6 basis points at 8.470%.