Rand hurt by subdued risk appetite
SA’s rand touched a two-week low on Wednesday morning as investors fretted about weak global growth.
|||Johannesburg - South Africa's rand touched a two-week low on Wednesday, hurt by subdued risk appetite as investors fretted about weak global growth and a warning by the central bank that any ratings downgrade could lead to increased capital outflows.
At 07h16 GMT, the rand traded at 14.7250 versus the dollar, 0.51 percent weaker from Tuesday's New York close and far off a five-month high of 14.1165 touched on Friday.
“Locally the rand once again failed to consolidate the gains of the previous sessions. Technically, this does not bode well for the local unit, as well as the continued concerns regarding a local downgrade,” Nedbank Capital analysts Mohammed Nalla and Reezwana Sumad said in a note.
The South African Reserve Bank said on Tuesday that any further ratings downgrade of Africa's most industrialised economy could lead to increased capital outflows.
Ratings agencies have warned of possible downgrades should Pretoria show a lack of commitment to reining in its budget deficit. Standard & Poor's and Fitch rate South Africa a notch above sub-investment grade, while Moody's has it two notches above.
Globally, disappointing manufacturing surveys from China and the UK combined with downgrades to growth and inflation forecasts from the European Commission to sour the mood.
On the stock market, the Top-40 index was down 0.8 percent, while the broader all-share fell 0.67 percent in early trade.
In fixed income, the yield for the benchmark instrument due in 2026 was up 5.5 basis points to 9.165 percent.
REUTERS