Rand steadies following earlier slump to six-year lows growth

JOHANNESBURG — The rand was steady in late trade on Friday after the panic selling that pushed the local currency to fresh six-year lows earlier abated.

At 3.40pm, the rand was at R11,6199 to the dollar, unchanged from its overnight close.

The rand was slightly weaker against the euro‚ trading at R14,4626 from R14,3994 at Thursday’s close and was relatively flat against the pound, trading at R18,2513 from R18,2619 previously.

The rand had slid to a fresh six-year low of R11,67 to the dollar in mid-morning trade as investors scrambled for foreign currency, just hours before the much-awaited verdict on South Africa’s credit ratings.

This brought losses since last week to more than 2%. The domestic unit has in the same period lost 3.41% against the British pound and dropped 3.75% to the euro.

Standard&Poor’s (S&P) and Fitch will make their credit ratings announcements later on Friday.

Analysts do not expect S&P to downgrade SA’s sovereign rating given they only made an adjustment to our rating about six months ago.

Risks lie with the uncertainty over what Fitch will do given the country’s structural problems, which include faltering economic growth, a large current account shortfall and Eskom’s shortcomings in supplying power to the economy.

If the ratings announcements come after the local market has closed, as expected, their effect on the currency will only be seen today. The euro was at $1,2449 against the dollar from $1,2392 previously.

— BD Live

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