Rand and stocks take a massive knock

THE RAND headed for its biggest drop against the dollar since 2016, according to Bloomberg, buffeted by headwinds including a downbeat assessment of the economy by Moody’s Investors Service and a plunge in the biggest company on the JSE.

Moody’s report, “Government of South Africa: Fiscal slippages likely this year, but medium-term targets remain within reach”, found that the pace of South Africa’s fiscal consolidation would be slower than government forecast as weaker than expected economic growth and a rising public sector wage bill acted as fiscal headwinds.

The rand gave up 3.4 percent after this revelation, which was made after SA Reserve Bank governor Lesetja Kganyago said he was worried about the country’s growth projections.

At 5pm the domestic currency was bid 37 cents weaker than Tuesday’s same time bid at R14.57 to the dollar. Against the pound, the rand was 40c softer at R18.51 and to the euro, the currency declined 37c to R16.53.

Corporate treasury manager at Peregrine Treasury Solutions, Bianca Botes, said the dollar gained strong momentum during overnight trading, lingering at its strongest in 13 months high, as gold declined to its weakest in 18 months, mostly driven by a weak euro compared to the dollar.

TreasuryOne senior currency dealer Andre Botha said the domestic currency was facing pressure from two sides with the US dollar on one side and the Turkish narrative on the other side.

Naspers, which accounts for 18 percent of the benchmark stock index, tumbled after Tencent Holdings, in which it owns a 31 percent stake, missed earnings estimates, according to Bloomberg. That raised concerns about outflows from the stock market. The benchmark index of equities fell the most since May.

The blue chip Top40 index retreated 3.76 percent to 49 615.06 points, while the broader all share index plunged 3.41 percent to 55 646.15 points.

Naspers was down 8.22 percent to close at R3 060.88.

Miners were also big losers, with Gold Fields dropping 10.85 percent to R37.30 and Kumba Iron Ore declining 9.67 percent to R263.31.

Sibanye plunged 8.52 percent to R7.52 and AngloGold Ashanti fell 7.52 percent at R109.31.