Stocks snapped four sessions of gains as Naspers came off a record high.
At 5pm, the rand was bid at R13.8495 to the dollar, 15.31c stronger than at the same time on Tuesday, having traded as firmly as R13.83 shortly after the US currency was knocked to a one-week low following disappointing durable goods data.
Traders said moves on the rand would also be exaggerated by low volumes as markets in the US wind down for the Thanksgiving holiday that will keep them closed until Monday.
“This move doesn’t seem as if it was based on much volume. It could be that people who had short-rand positions are closing them out in case a downgrade doesn’t happen on Friday,” derivatives broker at Tradition Futures, Gillian van Heerden, said.
Thirteen of 25 economists surveyed on Monday said at least one of the major rating agencies would cut South Africa’s local currency debt to “junk” in tomorrow’s reviews. That could trigger outflows from local bonds of more than R100 billion.
“People also don’t want to be caught with the wrong view where they cannot get out quickly,” said Van Heerden.
Traders at London-based TD Securities said that the market seemed complacent about rand risks and “skewed to optimism” on the downgrades and that a double downgrade would trigger a large fall in the currency.
But a cheaper rand could be an attractive buy before the ANC chooses a new leader - and likely eventual successor to President Jacob Zuma - at a conference in December, they said.
In bonds, the yield for the benchmark paper due in 2026 was down 2.5 basis points to 9.405%.
On the bourse, the benchmark JSE Top40 index was down 1.04% at 54494.94 points, while the broader all share index shed 0.75% to 60751.18 points.
Naspers, an e-commerce and publishing firm, declined 4.64% to close at R3900.10.