MARKETS RAND AND STOCKS WEAKER

THE RAND weakened around 1 percent yesterday, recording a third consecutive session of losses, as investors continued to take profits from last week’s rally, while mixed domestic economic data also kept the currency on the back foot.

At 5pm the rand was weaker at R15.34 to the dollar, having fallen as much as 1 percent earlier to a session-low R15.39.

South Africa recorded a trade surplus of R36.13 billion in October after a revised R33.36bn surplus in September. The budget deficit was wider, at R49.73bn, for the month.

The and has defied credit downgrades, which have pushed South Africa’s rating deeper into junk, rallying to pre-Covid-19 levels as optimism over progress on a coronavirus vaccine has increased risk appetite globally. But in the past few sessions the fragile domestic economy has come back into focus.

“Strong risk-on financial market sentiment this month as vaccine news improves each week masks the deterioration in SA’s credit quality, and so brings a false sense of security on the market reaction to SA’s rating downgrades,” said Annabel Bishop, chief economist at Investec.

Bonds also weakened, with the yield on the benchmark 2030 paper adding 3 basis points to 8.99 percent.

On the stock market, the all share index closed down 1.26 percent at 57 091.89 points and the blue-chip Top40 companies index lost 1.22 percent at 52 375.5 points.

The banking sector fell 3.86 percent with Standard Bank down 4.83 percent to R121.14 while Nedbank dropped 5.54 percent at R122.50.

Credit rating agencies Fitch and Moody’s lowered South Africa’s sovereign ratings deeper into junk territory on November 20.

S&P Global affirmed its rating, which was already two notches below investment grade. I Reuters