Share

Rand roils as S&P downgrades SA

Cape Town – The rand continued to weaken as political uncertainty forced the hand of credit ratings agency, Standard & Poor’s (S&P) Global Ratings, to downgrade South Africa’s long term foreign currency rating from BBB- to BB+.

The local currency rating has moved from BBB to BBB-, where the foreign currency rating previously was. Approximately 10% of South Africa’s debt is raised in foreign currency, with the majority denominated in rand. 

S&P were scheduled to announce their review of South Africa’s credit rating on June 2 however, Reuters reported that the agency held an emergency meeting over the weekend to reevaluate the country’s credit and made the downgrade announcement today at approximately 17:34.  

Moody’s currently has South Africa two notches above junk status and is set to announce its ratings review on Friday, April 7. However, it is expected that they will follow suit. 

The rand weakened sharply to R13.74 and by 21:12 was trading 2.36% lower at R13.73/$ from its previos close and from R13.57 upon the release of the ratings downgrade.  


The JSE ended firmer, closing just before the announcement.  

Overall markets were bolstered by resources and rand hedge stocks amid concerns regarding the lower sovereign credit ratings. In terms of the market movements for the day; the blue chip JSE Top 40 gained 0.87%, while the broader All Share Index firmed 0.77%.  

At the close of the JSE, the Resources Index was up 1.53%, the industrial index was 0.06% up.  The banks faced further weakness as the Financial Index lost 0.03%. 

Commodities

Brent Crude oil prices firmed to $53.14 per barrel after reaching the strongest level in almost four weeks during intra-day trade amid optimism that OPEC will extend its production-cut deal.

OPEC agreed in November last year to curb its output by around 1.2 m barrels per day for the first half of the year. Russia and a handful of other non-OPEC producers have agreed to jointly cut an additional 600k barrels per day.

Oilfield and data service provider Baker Hughes announced last Friday that the number of active U.S. rigs drilling for oil rose for 11 weeks in a row. The total rig count now sits at 662, the most since September 2015, suggesting that global oil supply exceeds demand.

Gold firmed 0.28% to $1251/0z as it continues to edge higher, however the metal is having trouble trending above its 200-day moving average. 

* This report is from the Trading Desk at EasyEquities, Fin24's content partner on equities and market moves.

Read Fin24's top stories trending on Twitter:

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.94
-0.2%
Rand - Pound
23.91
-0.1%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.1%
Platinum
910.50
+1.5%
Palladium
1,011.50
+1.0%
Gold
2,220.00
+1.2%
Silver
24.86
+0.9%
Brent Crude
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
+2.8%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders