South Africa’s rand firmed slightly on Friday, buoyed by global vaccine news, but investors were cautious ahead of credit rating reviews expected later in the day.
At 17:30, the rand was roughly 0.1% stronger at 15.3675 per dollar, lifted after Pfizer said it had applied for emergency use authorisation in the United States for its COVID-19 vaccine.
Later on Friday, S&P Global and Moody’s may publish updated assessments of South Africa’s creditworthiness.
The rand hardly budged on Thursday after the central bank kept rates on hold at 3.5%, in line with market expectations. Analysts said the prospect of ratings updates were keeping investors cautious.
“Should these two ratings agencies provide an update today, which they are in no way obligated to (do) with a postponement also an attractive option to them, it is unlikely to be ZAR-bullish,” economists at ETM Analytics said in a note.
The two agencies, along with the other “big three” firm Fitch, already have South Africa’s debt at sub-investment grade, or “junk” status.
“Both agencies have fired warning shots in recent months, suggesting Finance Minister Tito Mboweni’s MTBPS (budget speech) did little to persuade them that SA is on the path to fiscal salvation,” ETM analysts wrote.
Bonds were a touch firmer. The yield on the benchmark 2030 government issue was down 1 basis points to 8.830%.
The Johannesburg Stock Exchange (JSE) treaded a cautious path as well with the main indices slightly down in a broad-based slump in share prices of companies across sectors.
The benchmark all-share index was down 0.24% to 56,615 points, ending the week lower. The bluechip top 40 companies index closed down 0.12% to 51,915 points.
The banks were once again the biggest losers with the index down almost 3%. The index, which represents the top six banks of the country, has lost over 6.5% in last seven trading sessions.