File Photo: IOL

CAPE TOWN – The rand strengthened on Friday ahead of the much-awaited Moody’s announcement in what can be described as an eventful week for the market as South Africa takes in the news of Nhlanhla Nene’s exit from the Finance Ministry to be replaced by former SA Reserve Bank Governor Tito Mboweni.

At 15:50 the domestic currency was trading at R14.45 to the dollar staying within a range of R14.42 to R14.65 as expected by analysts.

The market is keeping close watch of potential changes to the creditworthiness of the country’s sovereign with rating agency Moody's Investors Services widely expected to keep South Africa at investment grade.

According to rating agencies will likely look out for three priority areas that could trigger changes to the country’s credit rating:

  1. Continued commitment to fiscal consolidation
  2. Reform in state-owned enterprises
  3. Focus on economic growth

LISTEN: Commentary from economist Dr Chris Harmse.

Peregrine Treasury Solutions’ corporate treasury manager, Bianca Botes, said the rand celebrated the news of former Minister Nhlanhla Nene's replacement after uncertainty again tainted the government. 

“This victory was, however, short-lived, as reality set in and quickly corrected the overreaction to the news.

“The global environment remains largely unchanged with the US still dominating the playing field. However, this sentiment seems to be shifting slightly, as the US dollar hit its lowest levels for October last night during trade as stocks tumbled,”said Botes.

TreasuryONE director and head of dealing Wichard  Cilliers noted that the dollar had fallen further overnight after the poor US inflation data. 

“US treasury yields were lower, with the 10-year yield down to 3.13 percent and the 30-year yield down to 3.31 percent. The equity markets continued their correction as the Dow slipped by 2.13 percent and the Standard & Poor’s down by 2.06 percent. 

“Gold benefitted from a safe haven perspective to be trading at $1 220,” said Cilliers.