Fin24

Rand weakens on further downgrades

2012-10-17 14:00

Johannesburg – The rand weakened close to noon on Wednesday after more downgrades from ratings agency Standard & Poor’s on local companies.

“The rand is down due to S&P downgrading Sasol and Eskom this morning. A downgrade means it will be more expensive for the two companies to borrow money‚” said Mark Kalkwarf‚ a senior portfolio manager from the Iquad Group.

At 11:41am‚ the rand was bid at R8.6987 to the dollar from Tuesday’s close of R8.6855. It was bid at R11.4044 the euro from its previous close of R11.3770‚ and at R14.0559 against sterling from R13.9973 before.

Kalkwarf said that the affect from the downgrades had been counteracted by the stronger euro.

“The euro has lifted overnight due to expectations of Spain getting a bailout. The problem is that Germany wants Spain to ask for it and the banks won’t get the funding unless they implement reforms in the sector‚” he added.