RAND LOWER, STOCKS HIGHER

THE RAND weakened against the dollar yesterday ahead of a central bank meeting later this week and key economic data that investors will use to gauge how the economy is performing.

At 5pm, the rand bid at R14.4401 to the dollar, 18 cents softer than at the same time on Friday.

This week the focus will shift to the SA Reserve Bank’s monetary policy meeting on Thursday, when it will announce its interest rate decision after keeping rates on hold at 6.5 percent at its last meeting.

Other key data due this week include consumer confidence today, November retail sales tomorrow and mining production on Thursday.

“Where the rand concludes this week may be heavily influenced by the South African Reserve Bank’s rates decision,” said Lukman Otunuga, Senior Research Analyst at FXTM.

The rand also reacted to Moody’s comments that low growth and limited scope to reduce spending will keep SA’s fiscal deficits elevated in 2020.

The ratings agency said it expected only a modest acceleration in growth to 1 percent in 2020 from 0.7 percent in 2019, “which is still below the 1.7 percent average growth rate recorded over the past decade”.

In November, Moody’s kept the country’s last investment-grade credit rating intact, but revised the outlook on that rating from stable to negative, sending a warning that a downgrade could follow in the next 12-18 months – or sooner if the government doesn’t come up with a credible budget in February.

The rand has struggled for momentum in recent weeks as power cuts and weak domestic economic data failed to provide a basis for optimism.

In fixed income, the yield on the benchmark instrument due in 2026 was up 5 basis point to 8.28 percent.

In the equities market, the JSE all share index rose 0.15 percent to 57 572.72 points, while the Top40 index gained 0.19 percent to 51 343.39 points.

Stocks gained alongside emerging market peers as investors awaited the signing of a US-China trade deal this week. I Reuters