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#RandReport: Rand firmer ahead of Fed, stocks inch up

All but two of the 18 economists polled by Reuters this week said South Africa would avoid a credit rating downgrade by Moody’s when it publishes its review on 23 March.

FILE: Picture: Christa Eybers/EWN.

JOHANNESBURG - South Africa’s rand gained was firmer on Tuesday as positive inflation figures and the likelihood the country would avoid a downgrade by Moody’s soothed sentiment ahead of an anticipated lending rates increase in the United States.

Stocks were slightly firmer as emerging stocks globally snapped a recent losing streak struggled higher, with shares of companies exposed to the local economy amongst the day’s winners.

At 15.20 GMT the rand had strengthened 0.67% to 11.9425 per dollar, beating fellow emerging market currencies which traded weaker as investors treaded cautiously ahead the Federal Reserve meeting.

“Investors are less concerned with about the downgrade than before. It’s a combination of political confidence and the reprieve led to stronger demand even though other EM’s are down,” said analyst at ETM Analytics Halen Bothma.

All but two of the 18 economists polled by Reuters this week said South Africa would avoid a credit rating downgrade by Moody’s when it publishes its review on 23 March.

Data by Statistics SA showed headline inflation slowed to 4.0% year-on-year in February from 4.4% in January, raising the chances of a lending rate cut by the local central bank next week.

In fixed income, the yield for the benchmark government bond due in 2026 was down 10 basis points at 8.06%.

On the bourse, the All-share index closed slightly higher by 0.34% to 58,288 points and the benchmark Top-40 index gained by the same margin to 51,615 points after strong performances from retailers and industrials.

The banking index was up 0.76 percent on the day, with RMB Holdings up 3.3% to R81.19 and First Rand gaining 1.49% to R70.80.

Embattled retailer Steinhoff was among the worst performers, falling 8.74% to R3.55 after reports that it was considering the sale of some of its Steinhoff Africa Retail shares in efforts to cut debt.

“Eventually they are going to have to restructure some of their debts. Hopefully, the banks will corporate,” said Cratos Capital equities trader, Greg Davies, referring to Steinhoff.

Its unit Steinhoff Africa Retail slumped nearly 4% to R21.04 on fears that a sell-down by a parent would most likely be carried out at a discount.

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