RAND SLIPS TO 3-WEEK LOWS

THE RAND fell to more than threeweek lows yesterday, hurt by subdued risk appetite and after ratings agency Fitch said South Africa would continue to face challenges as it sought to stabilise debt.

At 5pm, the rand was trading at R14.87 against the dollar, 0.6 percent weaker than its previous close.

The currency has been hit this week by the fallout especially on emerging markets from Chinese property firm Evergrande’s debt debacle, a rout in commodity prices and a stronger dollar.

Yesterday, Fitch said even though stronger-than-expected fiscal revenue in recent months meant that South Africa’s budget deficit would be smaller than earlier Treasury projections, the government would still face challenges to stabilise debt.

Affirming South Africa’s rating at ‘BB-’ with a negative outlook in May, Fitch indicated that progress on fiscal consolidation that boosts confidence that government debt/GDP stabilisation would be achieved could be a trigger for positive rating action.

“However, even if the deficit is lower than anticipated in FY21/22, it is unclear whether this outperformance will be sustained,” Fitch said in yesterday’s statement, adding that notably, mining revenue would slow as commodity prices becomes less supportive.

Looking ahead, the US Federal Reserve meeting due to conclude tonight will be critical for all emerging market currencies as a tapering of its stimulus measures would likely prompt a flight of capital to the dollar.

The SA Reserve Bank’s monetary policy meeting tomorrow will also be a key event for the local currency.

Stocks rose, rebounding alongside commodity prices after the previous day’s heavy selling.

The JSE blue-chip Top40 index advanced 1.52 percent to 56 085.63 points and the broader all share index rose 1.48 percent to 62 362.18 points.