The rand was to normal for gains in excess of 2% contrary to the dollar this week, despite some profit-taking on Friday, after Moody’s signalled that it was unlikely to strip Africa of the last investment grade credit score this year.
That marks a turnaround for any South African currency, which has been dragged sharply lower since early August by poor economic data and fears that currency crises in Turkey and Argentina could spark full of exodus from emerging market assets.
Moody’s lead analyst for South Africa said on Thursday there were “little chance” the country might be downgraded at the rating review scheduled for in a few days.
Read:?Moody’s expects ‘slow recovery’ in SA economy?
Her comments were noticeably more upbeat when compared to a Moody’s research report released after data showed this morning the economy fell into recession in the second quarter.
First National Bank (FNB) analysts said the greater positive tone from Moody’s became a rare component of good news for the country suffering from weak business confidence and policy uncertainty.
The reprieve from Moody’s “enables Nigeria time for it to address its fiscal imbalances and remain from the Citi World Government Bond Index,” FNB analysts said, dealing with chance which a downgrade might lead to South African bonds to become ejected from a single within the world’s major global bond indices.
At 1525 GMT the rand was 0.7% weaker at 14.88 compared to the dollar. Even so it was 2.4% stronger than its close last Friday after rising for four straight sessions from Monday to Thursday.
Next week investor attention turns to the South African Reserve Bank (Sarb), which holds a monetary policy meeting on Sept. 20. All bar on the list of economists polled by Reuters recently predicted how the SARB would go away its main lending rate at 6.5%, while it weighs economic weakness against a pickup in inflation.
On the Johannesburg bourse, stocks ended the week firmer, based on global markets buoyed by expectations that this America and China would open new trade talks.
The blue-chip top-40 index strengthened 0.90% to 50,441 points, as the broader All-share index was 0.74% firmer at 56,582 points.
“There has been fairly healthy markets over the back within the trade talks, as well as local market seems to be following suit,” said Ryan Wood, equities trader at Independent Securities.
Among Friday’s top gainers, Investec soared almost 10% after it announced offers to spin off its asset management unit within a surprise restructuring.?
Read:?Investec asset management spin off plan lifts shares
