The rand has been in vogue since President Cyril Ramaphosa replaced scandal-plagued Jacob Zuma last month but some investors are concerned the currency’s rally is losing steam.
“We believe most of the good local news is priced in at these levels and the trend will be driven by global risk appetite and further evidence of domestic reforms that can lift potential growth,” RMB analysts said in a note.
However, at 5pm, the rand bid at R11.6435 to the dollar, 1.46cents firmer than same time on Monday.
S&P ratings agency said the country was not anywhere near being upgraded, sapping momentum provided in the previous session by Moody’s raising its credit outlook.
Forwards markets were pricing in a 89percent chance of a 25 basis point rate cut at the SA Reserve Bank’s monetary policy meeting today.
In fixed income, the yield for the benchmark government bond due in 2026 was down 2.5 basis points to 7.890percent.
Shares eased slightly with construction firm Murray & Roberts the big mover, falling as much as 6 percent after the management rejected the offer of a buyout from Germany’s ATON, already a majority shareholder.
Murray & Robert’s shares closed down 4.13percent to R13.45.
The benchmark JSE Top40 index dropped 0.3percent to 49417.76 points. The broader all share index was down 0.22percent to 56050.79 points.
“Our shares are trading at big discounts and might become a target for foreign investors,” said Greg Davis, equities trader at Cratos Wealth.
“We are surprised that the market is not a lot stronger after the positive news from Moody’s and a good chance of a rate cut tomorrow.”
Meanwhile, global stock markets mostly gained yesterday as reports that the US and China were negotiating to avert a trade war whetted investors’ appetite for riskier assets.
In afternoon trading, US stock indices were working to sustain momentum one day after major indices turned their best day of performance since August2015.