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Rand dips on Zuma showdown and downgrade jitters

Mar 18 2016 10:17

Johannesburg - The rand weakened against the dollar early on Friday as investors turned focus to a political scandal that has jolted President Jacob Zuma's government and a potential sovereign ratings downgrade.

At 09:02, the rand traded at R15.2400/$, 0.46% weaker from Thursday's New York close of R15.1700.

The currency had rallied more than 3% to its strongest in more than a week on Thursday after the Reserve Bank hiked interest rates.

READ: Hike in interest rate

"Factors to consider are any news on the political front, over the long weekend the ANC (African National Congress) is holding its NEC (National Executive Committee) Lekgotla and we await any news from Moody's who are currently in South Africa," Nedbank analysts said in a note, referring to a meeting of the top brass of the ruling party.

Analysts from Moody's credit rating agency were due to complete their three-day visit to South Africa on Friday after putting its Baa2 rating on review, according to the Treasury.

READ: Nuclear will plunge SA into ‘junk status’ - economist

Investors fear further political uncertainty could hasten a downgrade, with Fitch and Standard & Poor's already rating the country just one step above junk status.

The government has been jolted this week by suggestions that the wealthy Gupta family, who have close ties to Zuma, may have been behind his decision to sack the country's respected finance minister Nhlanhla Nene in December.

READ: I'm addressing Gordhan, Sars spat, says Zuma

Zuma, who is due to hold a three-day meeting with top ANC officials from Friday, has denied being influenced by anyone in the appointment of cabinet ministers.

On the stock market, the benchmark Top 40 index was flat in early trade, sliding 0.02%.

In fixed income, the yield for the benchmark instrument due in 2026 was down 3 basis points to 9.145%.

rand  |  markets  |  currencies


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