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#RandReport: Rand slips ahead of Moody's; Naspers dents bourse

At 1537 GMT, the rand was 0.63% weaker at 11.8900 per dollar, down from a session-best 11.7700 as traders took profits on the brief rally.

Picture: EWN.

JOHANNESBURG - The rand weakened on Thursday as investors treaded cautiously and booked recent profits ahead of Moody’s review of the country’s sovereign credit rating on Friday.

Bourse heavy-weight Naspers fell sharply after the media and e-commerce company said it would sell a minor in Chinese Internet firm Tencent.

At 1537 GMT, the rand was 0.63% weaker at 11.8900 per dollar, down from a session-best 11.7700 as traders took profits on the brief rally and placed defensive positions in anticipation of increased volatility ahead of the decision by Moody’s on Friday.

While South Africa is expected to avoid a downgrade by Moody’s, according to a Reuters poll, concerns about economic growth and governance at state firms remain major risks, cooling demand for the currency.

“We remain cautious about rand exchange rates, and have pencilled in a moderate depreciation of the South African currency in our forecasts,” said analyst at Germany based Commerzbank Elisabeth Andreae.

The rand was stronger for most of Wednesday and the early part on Thursday after the US Federal Reserve surprised with a dovish outlook.

At its first policy meeting under new Fed chief Jerome Powell, the Fed delivered a widely expected 25 basis point rate hike and signalled at least two more increases for 2018 and not the four hikes most analysts were betting on.

This sparked a brief rally for emerging market currencies as the greenback slipped to its lowest in more than a month.

In bonds, the yield for the benchmark government bond due in 2026 was down 7 basis points at 8.010%.

On the bourse, the benchmark Top-40 index was down 2.13% to 50,517 points while the All-Share index fell 1.85 percent to 57,224 points.

Naspers fell 4.6% to R3,300 after saying it would sell 2% of its stake in Tencent, in which it currently has a 33% shareholding, in order to invest in the growth of its e-commerce sector. Tencent had also earlier reported missing its quarterly revenue estimates.

Retailer Steinhoff tumbled 13% to R3 after announcing on Tuesday it was considering a sale of its shares in Steinhoff Africa Retail.

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