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Rand hits week low after bank downgrades

Johannesburg - The rand fell to its weakest in a week on Wednesday as a ratings downgrade on South African banks hit sentiment locally while upbeat US economic data supported dollar bulls.

The rand initially held its own against the US dollar rally the previous session, however a Moody's downgrade of South Africa's four largest banks after the stock market close saw the rand notch up another daily loss.

At 10:47 SA time on Wednesday, the unit hit a session low so far at 10.6706/dollar, down on its previous close. Earlier the local unit touched 10.6790, its weakest level since August 12.

“Last night's rand jump seems a bit extreme. Mostly a Moody reaction rather than being an able reflection on what's going on, so some pullback is possible this morning,” John Cairns, currency strategist at Rand Merchant Bank said in a market note.

“Still, the trend on dollar/rand is clearly towards the upside on the 10.50-10.80 narrow range.”

The currency now looks headed for four days of daily losses.

It has been in a weakening trend since it balked from testing 10.5000 resistance last week. - Reuters

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