#RandReport: Rand firms after Moody's hints at ratings reprieve
The rand rose 0.37% to 13.9675 to the dollar by 16:07 GMT compared with the previous day’s close of 14.0200 in New York.
JOHANNESBURG - The rand strengthened against the dollar on Friday, putting it on track to end a week marked by the annual Budget higher, after Moody’s signalled the nation’s spending plans did not weaken its policy credibility.
Stocks rose, with Truworths International among the big gainers after management presented a detailed half-year results.
The rand rose 0.37% to 13.9675 to the dollar by 16:07 GMT compared with the previous day’s close of 14.0200 in New York and the week’s low of 14.3700 on the day of the budget.
On Thursday, Moody’s, the last of the big three rating agencies to maintain an investment grade on South Africa, said that the government’s decision to raise its spending ceiling by R16 billion ($1.14 billion) did not weaken fiscal policy credibility.
Attention had turned to rating agencies’ reaction to the Budget, which included a bleaker outlook for economic growth and debt and a bailout for struggling state-run power firm Eskom, after concerns it could prompt a downgrade.
But Nedbank analysts Mehul Daya and Walter de Wet wrote in a note on Friday that market reaction had been too negative.
“The main talking point in South Africa financial markets over the past couple of days has been the rand’s ability to contain weakness and in fact strengthen after the 2019 National Budget,” they said.
They added the budget had been presented in the “most credible form possible, which would mean South Africa could avert a credit downgrade by Moody’s but we could still see a negative outlook.”
Government bonds firmed, with the yield on benchmark 2026 paper easing 1 basis points to 8.715%.
On the bourse, the Johannesburg all-share index rose 0.92% to 55,992 points, while the top-40 index climbed 1.08% to 49,735 points.
Middle to high-end fashion retailer topped the Top-40 index, rising 5.44% to 76.02 after the firm provided more context on its half-year results released on Thursday and announced the launch of new concept stores in the UK and South Africa to boost sales there.
Blue Label Telecoms closed 3.81% stronger to R5.45 after it said a consortium had agreed to take a minority stake in South Africa’s third largest mobile carrier Cell C, of which it owns 45%. It said the deal would help the debt-ridden company.