Rand up on the back of weaker dol­lar

The New Age (Gauteng) - - BUSINESS -

THE rand rose yes­ter­day and lo­cal bond yields fell to three-week lows, helped by slow­ing in­fla­tion, the gov­ern­ment’s re­jec­tion of na­tion­al­i­sa­tion and the tail­wind of a weaker dol­lar.

The rand firmed 0.7% against the dol­lar to a three-week high and the 2026 bench­mark gov­ern­ment bond yield fell af­ter con­sumer in­fla­tion eased in March and Fi­nance Min­is­ter Malusi Gi­gaba dis­missed calls from one of his own ad­vis­ers for the na­tion­al­i­sa­tion of banks and mines.

The av­er­age yield spread paid by South African sov­er­eign bonds over US Trea­suries on the JP Mor­gan EMBI Global Di­ver­si­fied also nar­rowed six ba­sis points (bps) to 278 bps, a twoweek low, out­per­form­ing the broader in­dex.

South African as­sets have weath­ered a tur­bu­lent pe­riod, hit by two credit rat­ings down­grades to junk fol­low­ing the sack­ing of busi­ness­friendly fi­nance min­is­ter Pravin Gord­han.

Gi­gaba’s com­ments show an at­tempt to calm in­vestors but S&P Global Rat­ings warned ear­lier that South Africa’s credit rat­ing could get down­graded deeper into junk ter­ri­tory if on­go­ing po­lit­i­cal un­cer­tainty stalls the re­forms needed to grow the econ­omy.

“Of the big coun­tries, that’s the one that has more risk at­tached to it po­lit­i­cally, even more so than Turkey,” said Daniel Moreno, an emerg­ing mar­kets debt fund man­ager at Rubrics As­set Man­age­ment.

“In Turkey there is cer­tainty, in South Africa there isn’t.

“They need a very sta­ble gov­ern­ment with a very clear pol­icy and they don’t have that.

“As long as we have a coun­try that is driven by the in­ter­nal pol­i­tics of the ANC, I don’t see how it can get any bet­ter,” Moreno said.

With the dol­lar slip­ping 0.3% against a bas­ket of cur­ren­cies, most other emerg­ing cur­ren­cies also made gains. – Reuters

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.