South Africa's rand firmed to a one-week high against the dollar early on Wednesday on improved risk appetite, but analysts said the unit looked vulnerable to the possibility of a credit ratings downgrade and a U.S. Federal Reserve interest rate hike.
Rand firms on risk appetite, vulnerable to ratings downgrade fears
At 0700 GMT, the rand traded at 15.5100 versus the dollar, 0.94 percent firmer from its New York close on Tuesday.
South African rand notes in a file photo. REUTERS/Siphiwe Sibeko
Recommended articles
![Zimbabweans have 21 days to exchange old banknotes for new ones (image used for illustration) [Reuters]](data:image/svg+xml;charset=utf8,%3Csvg%20xmlns%3D'http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg'%20width%3D'100'%20height%3D'100'%20data-ring-placeholder%3D'1'%3E%3C%2Fsvg%3E "Zimbabweans have 21 days to exchange old banknotes for new ones (image used for illustration) [Reuters]")
The currency was trading at its strongest levels since May 17, according to Thomson Reuters data.
"Locally the focus currently firmly on the impending announcements from Standard & Poor's and Fitch and the possibility of a Fed hike," Nedbank Capital analysts Mohammed Nalla and Reezwana Sumad said in a note.
"Yesterday’s U.S. new home sales have spurred hawkish sentiment even further and would suggest that the probability of a hike has increased significantly."
ADVERTISEMENT
Investors are also cautions ahead of ratings agency S&P review due to be published on June 3, which could see the South Africa debt rating cut to junk.
Fitch was also expected to publish its review next month.
On the stock market, the Top-40 index was up 0.68 percent, while the broader all-share rose 0.56 percent in early trade.
In fixed income, the yield for the benchmark instrument due in 2026 was down 5.5 basis points to 9.395 percent.
JOIN OUR PULSE COMMUNITY!
ADVERTISEMENT
Eyewitness? Submit your stories now via social or:
Email: eyewitness@pulse.ng
Recommended articles
Iranian morality police crack down on women who don't wear headscarves
FG sets up committee to compensate landowners affected by Lagos-Calabar road project
Kano Gov remains a bona fide member of our party - NNPP debunks suspension
We need ₦3.2trn to pay electricity subsidy in 2024 - FG
Tinubu's proactive approach to security threats yielding results, Ribadu claims
You will not walk alone - Gov Oyebanji assures late APC chairman’s family
Troops end 3 senior terrorist commanders, 189 others, arrest 341 suspects
Lagos Red Line to begin test-run soon, nearly 2 months after inauguration
Fresh reaction trails court's reinstatement of Ganduje as APC chair
Pulse Sports
Lionel Messi's son breaks the internet after scoring five goals for Inter Miami
Naija Stars Abroad: Onyedika, Boniface, and Osimhen shine across Europe
Victor Osimhen and Tobi Amusan make list of Forbes’ 30 under 30 Class of 2024
ADVERTISEMENT