Rand weakens after Fitch downgrade

Johannesburg - The rand weakened against the US dollar on Friday morning after Fitch downgraded SA’s sovereign credit rating by a notch due to political tension in the country.

“The rand not only weakened in relation to the dollar and SA’s other main trading partner currencies‚ but it also underperformed its emerging market and commodity-based currency peers‚” Absa Capital said in a note.

Graphic: Renjith Krishnan.

“We hasten to add that this weakness took place on relatively good volume‚ and even prior to last night’s Fitch downgrade announcement‚” the bank said.

At 8.36am‚ the rand was bid at R8.6724 to the US dollar from its previous close of R8.6566 on Thursday. The local currency was bid at R11.5002 to the euro from its previous close of R11.4872 and at R13.9977 against sterling from R13.9807 before.

The euro was bid at $1.3255 from its overnight close of $1.3272.

“One also needs to bear in mind that the rand tends to weaken during the month of January from a seasonal perspective‚ because traditionally a number of importers restock inventories that were depleted over the festive break‚” Absa Capital said. - I-Net Bridge