adminTHE rand was marginally weaker yesterday morning as economic growth concerns along with a possible credit rating downgrade later this week weighed in on the market.
The rand was at R10,7421 against the US dollar in the morning from Tuesday’s close of R10,7071.
Against the euro, it was at R14,5461 from its previous close of R14,4977 and at R17,9904 to the pound from R17,9305 on Tuesday.
The euro was at $1,3539 from $1,3544 overnight.
Barclays Research said in an early morning note that the rand came under pressure on Tuesday after Reserve Bank governor Gill Marcus expressed concerns about the growth outlook. She repeated the economy remained in a rate-hiking cycle and it was not the job of the Bank to address structural deficiencies in the economy.
Barclays said the rand managed to recoup some ground when manufacturing output posted a surprisingly large gain in April compared to the previous month, in contrast to expectations of a further contraction. But as markets digested news that mining minister Ngoako Ramathlodi was pulling out of mediation talks in the platinum sector, a fresh wave of depreciation emerged.
“Growing expectations that South Africa will be downgraded tomorrow, as evidenced by the widening of South Africa’s credit default swap spreads, also contributed to the weaker rand bias. We would expect the rand to weaken even further if tomorrow’s release of mining production data disappoint,” said Barclays.
The rand is expected to trade in the range of between R10,30 and R10,80 to the dollar over the short term. — BDlive.
Online Reporter