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Rand slips as Moody's visit and rate decision loom

Mar 15 2016 10:29

Johannesburg - The rand was softer against the dollar on Tuesday, in nervous trade ahead of a Moody's rating review visit and the Reserve Bank's interest rate decision later in the week.

Stocks opened lower, with the JSE's Top 40 index dipping 0.7%.

At 09:00 the rand was down 0.35% at R15.5950/$ compared with its New York close on Monday. It was trading at R15.68 at 10:20.

This followed a drop of nearly 2%on Monday, after Finance Minister Pravin Gordhan said it would be hard for South Africa to get its credit rating back up, should it be downgraded.

Moody's, Standard & Poor's and Fitch have all warned of possible downgrades after President Jacob Zuma changed finance ministers twice within a week in December, casting doubt on Pretoria's commitment to fiscal prudence.

READ: Moody's places SA on downgrade review

Moody's will start a three-day visit on Wednesday to review South Africa's rating.

Tuesday's rand weakness was also in line with softer emerging markets after the Bank of Japan held policy steady as expected, boosting the yen which is seen as a safe haven currency.

READ: Rand weakens on Gordhan's Moyane comments

"We expect international developments ... to hold more sway over the rand than local developments leading up to the MPC meeting on Thursday," Standard Bank said in a note, referring to the South African Reserve Bank monetary policy committee's own rate announcement.

Economists polled by Reuters say the MPC will wait until May before hiking interest rates again, despite rising inflation, as economic growth stutters.

On the bond market, government debt prices edged lower, and the yield for the benchmark instrument due in 2026 was up 3 basis points at 9.17%.


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rand  |  markets  |  currencies

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