SPY414.92-5.67 -1.35%
DIA332.96-5.20 -1.54%
IXIC14,030.38-130.97 -0.92%

UPDATE 1-South African rand hits 16-month high before Moody's review

UPDATE 1-South African rand hits 16-month high before Moody's review

05/07/2021 12:01
UPDATE 1-South African rand hits 16-month high before Moody's review

Updates to reflect afternoon trade

- The rand gained strongly on Friday, hitting its highest level against the dollar since January 2020, hours before Moody's was scheduled to publish a review of South Africa's credit rating.

The main driver was worse-than-expected U.S. jobs data, which hurt the dollar. nL1N2MU0QE

The nonfarm payrolls miss cooled expectations that a U.S. economic recovery would lead to higher interest rates any time soon, boosting appetite for riskier assets including those in emerging markets.

At 1555 GMT, the rand ZAR=D3 stood at 14.0550 against the dollar, roughly 0.9% stronger on the day.

Moody's was due to issue its review South Africa's sovereign rating later on Friday, but analysts including those at Rand Merchant Bank expected it to keep the foreign-currency rating at 'Ba2', a sub-investment grade.

The country's public finances were in bad shape before the COVID-19 pandemic struck and have deteriorated since, but the National Treasury has tried to avoid a debt spiral by curbing the public sector wage bill. nL8N2KU4U1

In fixed income, the yield on the benchmark 2030 government bond ZAR2030= was little changed at 9.05%.

On the Johannesburg bourse, stocks rose, with the Top-40 Index .JTOPI rising 1.41% to 62,573 points and the All-Share Index .JALSH climbing 1.35% to 68,520 points.

The stronger rand was the main driver behind many increases, with companies that tend to benefit from a stronger local currency, such as banks and insurers, leading the market.



(Reporting by Alexander Winning and Emma Rumney; Editing by Kevin Liffey)

(([email protected]; +27 10 346 1076))