JOHANNESBURG - The rand slipped close to a two-month low against the greenback during yesterday’s European session according to NKC Research.
The local unit struggled to gain momentum as a statement by Moody’s earlier in the week spurred fears of a rating downgrade to cap a volatile week punctuated by the People’s Bank of China’s (PBoC) decision to allow a breach of the totemic CNY7/$ threshold. At this stage, our baseline expectation is for Moody’s to announce a credit outlook downgrade from stable to negative on November 1, although we do not expect a decision to cut South Africa to junk status – a move which will spur massive portfolio outflows. At the close of local trade, the rand quoted 1 percent weaker at R15.08/$, after trading in range of R14.83/$ - R15.12/$. The rand improved overnight. Expected range today R14.90/$ - R15.20/$.
South African bourse
The JSE All Share (+0.3 percent) ended higher yesterday. The weaker rand weighed on large financial (-0.9 percent) stocks but mining (+4.4 percent) shares shone on the back of firmer precious metals prices. In the overall emerging market sphere, the MSCI Emerging Market Index traded little changed.
Brent crude oil
The Brent oil price kept on falling yesterday, reaching its lowest level since the start of this year. Traders are concerned that the deepening trade rift between China and the US will dent the global economic outlook, and thereby dampen demand for crude. At the close of local trade, benchmark Brent crude futures quoted 3.3 percent lower at $56.98pb. Crude prices recovered during Asian trade this morning.
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