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The rand was off to a muted start on Thursday morning, continuing the theme that has been in play for the better part of the week.
“Investors appear to be waiting for some form of a catalyst to trade on, but aside from the Moody’s decision … next week Friday, there is very little else on the horizon,” said Wichard Cilliers, director and head of dealing at TreasuryOne.
Moody’s is the only major ratings agency to still rate SA’s debt at investment grade, after S&P Global Ratings and Fitch lowered it to junk in 2017.
Any further downgrade will automatically be the universal one, in which case the country’s debt will be excluded from the Citi-world government bond index.
The scenario carries potential consequences for the rand, which is a key variable in the outlook for inflation.
But, with interest rates in developed economies still at historic lows, investors remain on the lookout for better yield, and this could benefit the rand.
US inflation remains tame, implying that the US Federal Reserve will continue raise rates steadily, rather than aggressively.
There is also a renewed sense of optimism that President Cyril Ramaphosa will steer the country in the right direction.
Ramaphosa has hit the ground running since taking over the reins as the ANC leader in December, overseeing decisive changes at some state-owned enterprises that have previously drained the fiscus.
At 9.13am, the rand was at R11.7912 to the dollar from R11.7736, R14.5793 to the euro from R14.5623 and at R16.4826 to the pound from R16.4447.
The euro was at $1.3979 from $1.3965. – BusinessLive
Online Reporter