SA rand sags

JOHANNESBURG. — The rand was on the defensive yesterday morning, with analysts ascribing the latest bout of weakness to a report by Moody’s Investors Service.

On Monday, the ratings agency said in a statement that slow progress with structural reforms would continue to impede growth, raising fear of a downgrade that would flip SA into sub-investment-grade status. The weakening in the local currency came despite a weaker dollar and high commodity prices. The dollar index, which measures the greenback against a basket of major currencies, slipped to its weakest level since 2015 before recovering slightly.

The weaker dollar favoured commodity prices, with gold hovering at its best since early June at $1,268.19 an ounce in early trade.

“Waking up this morning and looking at the rand, one would expect to see a stronger dollar, but this is not the case,” TreasuryOne dealer Gerard van der Westhuizen said.

The weaker rand has the potential to derail inflation, which the Reserve Bank expects to average 5,3 percent for the rest of 2017. With headline inflation expected to stay within the Bank’s 3 percent to 6 percent target range, some analysts expect the central bank to further lower the repurchase rate, after a 25 basis point cut more than a week ago. At 9am, the rand was at R13,2202 to the dollar from R13,1749‚ at R15,63 to the euro from R15,6025 and at R17,4689 against the pound from R17,4127. The euro was at $1,1822 from $1,1842. BDLive