JOHANNESBURG - The Rand weakened yesterday as investors treaded cautiously and booked recent profits ahead of Moody’s review of the country’s sovereign credit rating today.
Bourse heavy-weight Naspers fell sharply after the media and e-commerce company said it would sell a minor stake in Chinese Internet firm Tencent.
At 5.37pm, the rand was 0.63percent weaker at R11.89 to the dollar, down from a session-best R11.77 as traders took profits on the brief rally and placed defensive positions in anticipation of increased volatility ahead of the decision by Moody’s.
However, at 5pm, the rand bid at R11.8468 to the dollar, which was 7.05cents firmer than at the same time on Wednesday.
While the country 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 yesterday after the US Federal Reserve (Fed) 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.
On the bourse, the benchmark JSE Top40 index was down 2.13percent to 50517.26 points, while the all share index fell 1.83percent to 57224.6 points.
Naspers fell 4.59percent to R3300 after saying it would sell 2percent of its stake in Tencent, in which it currently has a 33percent shareholding, in order to invest in the growth of its e-commerce sector. Tencent had also earlier reported missing its quarterly revenue estimates.
Steinhoff lost 12.96percent to R3.09 after announcing on Tuesday it was considering a sale of its shares in Steinhoff Africa Retail.