The rand steadied against the dollar on Tuesday, holding near a five-week high touched in the previous session after the country avoided a double downgrade of its local currency debt.
At 1500 GMT the rand was 0.3% firmer at 13.72 per dollar compared to a close of 13.76 overnight in New York.
The rand marched to a one-month best on Monday on relief that ratings agency Moody’s would wait until after the African National Congress (ANC) leadership conference, and possibly February’s budget, before downgrading the country’s debt.
S&P Global Ratings downgraded Pretoria’s local currency debt to sub-investment grade on Friday and thrust the foreign currency debt deeper into “junk” territory, while Moody’s opted to put the rating on review for a downgrade.
A downgrade by Moody’s could have forced index-tracking and rating-constrained funds to sell more than $10 billion in debt, analysts have predicted.
Traders said the rand had also benefited from increasing signs that Cyril Ramaphosa was leading Nkosazana Dlamini-Zuma in the race to replace President Jacob Zuma as leader of the ruling African National Congress (ANC).
“The market is starting to price a Ramaphosa victory. This we think is the real reason (for the rand strength),” said John Cairns, chief currency strategist at Rand Merchant Bank.
A survey on Thursday showed business confidence slipped deeper into negative territory in the fourth quarter, highlighting pressure still faced by the economy after it emerged from a first quarter recession.
The statistics office is due to release third quarter GDP figures next Tuesday.
Yields on the benchmark paper due in 2026 were down 6 basis points to 9.18%.
Stocks ended slightly weaker with mining shares out of favour as industrial metal prices faltered.
The benchmark JSE Top 40 Index lost 0.3% to 53 645 and the broader All Share Index was down 0.12% at 60 082.
Mining heavyweights took the most points off the index with Anglo American dropping 3.5% and rival BHP Billiton slipping 3.2%.