JOHANNESBURG - The rand swept aside recent losses and rallied more than 1percent to near its firmest in three weeks on Friday on overwhelming bets the country would dodge a downgrade to junk by Moody’s and dollar weakness.
Stocks continued their slide, tracking a broad slump by emerging market equities on fears of a global trade war, which left the dollar struggling at one-month lows.
A slump by bourse heavy-hitter Naspers deepened the market’s dip.
At 6.08pm, the rand was 0.89 percent firmer at R11.7525 to the dollar, a touch softer than its session best of R11.73, reached as trade in New York commenced with the cloud of escalating US China trade war sinking the greenback.
The risk premium on the rand was also steady with implied volatility on one-week and one-month options down substantially from levels seen in November before new President Cyril Ramaphosa was elected head of the ANC in mid-December.
Moody’s is the last of the top three agencies to rank South African debt as investment grade.
A cut to junk would see Pretoria’s bonds removed from Citi’s influential World Government Bond Index (WGBI), triggering a selloff of up to R100billion.
Bonds were also firmer, with the yield on the benchmark 2026 paper down 2 basis points to 7.99percent, its lowest since February22.
On the stock market, the JSE Top40 index ended 1.51percent lower to 49755.2 points while the broader all share fell 1.43percent to 56405.64 points.
Naspers was down 4.55percent to R3150 after announcing that it had sold two percent of its shares in Chinese Technology firm Tencent, reducing its holdings to 31.2percent, to strengthen its finances.
“Naspers has earmarked the money for other businesses which they see as exciting. I reckon they have their eyes set on India and food delivery in Europe,” said portfolio manager at Vestact, Byron Lotter.
The gold miners index ended strongly, led higher as spot bullion surged to a one-month high demand for the safe-haven asset climbed. AngloGold Ashanti topped the gold miners, up 5.67percent to R115.01 while Gold Fields gained 4.06percent to R48.43.