JOHANNESBURG – The rand recovered from three-week lows on Wednesday as fears of possible credit-rating downgrade eased, while stocks fell on profit-taking after they reached record highs.
At 1507 GMT, the rand traded at 13.2275 per dollar, 0.4% firmer than its New York close on Tuesday.
The rand started the day by dropping to a three-week low of 13.3200, extending losses suffered in the previous two sessions as it broke through technical support levels at 13.0000, 13.1200 and 13.3000.
The rand took a hit after Moody’s, the last of the top three ratings firms to rank South Africa investment grade, warned on Monday that pressure seemed to be growing on the central bank, and the Treasury, to implement expansionary policies .
Moody’s is expected announce a review on August 11.
“We think that the downgrade just two months after the previous one is unlikely,” 4Cast analysts said in a note. “We think that the currency will recover in the next few days, with the USD/ZAR possibly falling below the 13.00 support level.”
On the stock market, the benchmark Top-40 index fell 0.46% to 48 811 points and the All-Share index was down 0.34% to 55 200 points.
The All-Share index had extended its gains to a record 55,554.23 points on Wednesday, after gaining on Monday on foreign flows into equities and offshore earnings.
“Given the moves we’ve seen over the last seven to ten days, the market was due for a little bit of a pull-back,” Independent Securities trader Ryan Woods said.
Among the biggest fallers, AngloGold Ashanti dropped 3.88% to R127.95, Harmony Gold lowered 3.42% to R22.84 while African Oxygen was down 3.41% to R18.72 and bourse heavyweight Naspers fell 2.01% to R2 850.00.
In fixed income, the yield for the benchmark government due in 2026 fell 0.5 basis points to 8.615%.