Rand flat as virus-linked selloff gives way to budget caution

‘As the week draws to a close, investors are likely to favour the sidelines in the run-up to next week’s budget.’
Image: Waldo Swiegers/Bloomberg

The rand was flat in early trade on Friday, pausing a tumble to a four-month low in the previous session as risk-shy investors fretting over the impact of the coronavirus on global growth avoided big bets with key local events on the horizon.

At 0645 GMT the rand 0.09% weaker at R15.13 per dollar, stepping back from a dip to R15.17, its worst since late October, in the previous session.

Emerging market currencies fell in tandem on Thursday as fears over the creeping spread of the coronavirus epidemic drove investors out of risk assets to safe-havens such as the US dollar, gold and bonds.

China reported an uptick in infections from a virus that has already killed more than 2 200 people there and spread to Japan and South Korea.

With the local data calendar light until next Wednesday’s budget speech by Finance Minister Tito Mboweni, swings in sentiment toward the rand are set to be influenced by offshore events.

“As the week draws to a close, investors are likely to favour the sidelines in the run-up to next week’s budget, and global factors are likely to provide directional inspiration for the USD-ZAR,” traders at ETM Analysts said in a note.

In equities, AngloGold Ashanti reported a 72% jump in annual earnings, underpinned by higher bullion prices and solid performance from its Kibali operations in Democratic Republic of Congo.

Bonds were also flat, with the yield on the benchmark 2026 government issue steady at 7.935%. 

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