RAND SOARS AHEAD OF RATING

THE RAND gained strongly on Friday, hitting its highest level against the dollar since January 2020, hours before Moody’s was scheduled to publish a review of South Africa’s credit rating.

The main driver was worse-thanexpected US jobs data, which hurt the dollar.

The non-farm payrolls miss cooled expectations that a US economic recovery would lead to higher interest rates any time soon, boosting appetite for riskier assets including those in emerging markets.

At 5.55pm, the rand stood at R14.05 to the dollar, roughly 0.9 percent stronger on the day.

Moody’s was due to issue its review South Africa’s sovereign rating later on Friday, but analysts including those at Rand Merchant Bank expected it to keep the foreign-currency rating at ‘Ba2’, a sub-investment grade.

The country’s public finances were in bad shape before the Covid-19 pandemic struck and have deteriorated since, but the National Treasury has tried to avoid a debt spiral by curbing the public sector wage bill.

In fixed income, the yield on the benchmark 2030 government bond was little changed at 9.05 percent.

On the Johannesburg bourse, stocks rose, with the blue-chip Top40 index rising 1.41 percent to 62 573.36 points and the all share index climbing 1.35 percent to 68519.53 points.

The stronger rand was the main driver behind many increases, with companies that tend to benefit from a stronger local currency, such as banks and insurers, leading the market.

Meanwhile, European stocks closed at a record high on Friday, marking strong weekly gains as positive economic data and upbeat earnings underpinned hopes of a swift economic recovery from the Covid-19 pandemic.

The pan-European Stoxx 600 index rose 0.9 percent to a record high of 444.93 points.