Rand firmer, but stocks de­cline

The Star Early Edition - - LIFESTYLE -

THE RAND firmed against the dol­lar and gov­ern­ment bonds strength­ened yes­ter­day, shrug­ging off a credit down­grade by Moody’s of both lo­cal and for­eign cur­rency rat­ings as in­vestors kept faith in the high yields on of­fer.

At 5.20pm, the rand traded at R12.7925 to the dol­lar, 1.21 per­cent firmer than its close of R12.9475 on Fri­day in New York.

In fixed in­come, the yield for the bench­mark gov­ern­ment bond due in 2026 dropped.

In­vestec chief econ­o­mist, Annabel Bishop, said the rand and lo­cal cur­rency debt were boosted by re­newed risk ap­petite.

“The global risk-on phase has been aided by par­tic­u­larly low yields in de­vel­oped economies of­fer­ing a good dif­fer­en­tial,” Bishop wrote in a note.

“The in­flows have strength­ened the rand, prov­ing the cur­rent risk-on cy­cle to be an op­por­tune time to re­ceive down­grades from a yield and cur­rency per­spec­tive.”

Moody’s on Fri­day low­ered South Africa’s rat­ing by a sin­gle notch from Baa2 to Baa3, the bot­tom of the in­vest­ment grade ta­ble with a neg­a­tive out­look, cit­ing an abrupt cabi­net reshuf­fle and re­duced growth prospects.

Mean­while, stocks fell, led by rand hedge shares which came un­der pres­sure on a stronger rand.

The bench­mark JSE Top40 in­dex fell 1.54 per­cent to 45 168.67 points, while the all share in­dex lost 1.25 per­cent to 51 564 points. Bri­tish Amer­i­can To­bacco dropped 1.93 per­cent to R883.83.

Bourse heavy­weight Naspers de­clined 5.89 per­cent to R2 525, af­ter Chi­nese in­ter­net com­pany Ten­cent Hold­ings, a third of which is owned by Naspers, came un­der pres­sure as Asian stocks be­gan track­ing the slump in US tech­nol­ogy stocks.

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