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Africa, Forex

South Africa’s rand, stocks fall, traders eye Friday’s ratings review

(Updates prices)

JOHANNESBURG, Nov 19 (Reuters) – South Africa’s rand weakened on Thursday as the central bank’s decision to hold rates gave scant support and as traders awaited a sovereign rating review on Friday.

At 1530 GMT, the rand was trading 0.47% weaker at 15.5225 against the dollar, a tad below its morning opening level.

South Africa’s central bank left its main lending rate unchanged at 3.50% on Thursday on moderate consumer inflation outlook and uncertainty over the trajectory of coronavirus infections, Governor Lesetja Kganyago said.

Traders and analysts expect Friday’s ratings review by Moody’s and S&P’s to be a more important trigger for the rand.

Both firms already rate the country’s debt at subinvestment, but S&P has the country on a stable outlook.

Moody’s and Fitch already have South Africa on negative outlooks. Should S&P bypass an outlook change and move straight to a downgrade, the rand could suffer some steep losses, analysts said.

But research firm RMB Markets said in a report that there is likely to be no change to the ratings.

On the Johannesburg Stock Exchange (JSE), stocks across sectors fell, as the optimism stemming from progress with new coronavirus vaccines wavered.

In what was a broad-based slump, the benchmark all-share index lost 0.99% to end at 56,753 points, losing all the gains of last eight sessions. The bluechip index of top 40 companies closed down 1.03% to 51,978 points.

The bank index, which has led most of the market rally this month and had gained almost 30% in November, lost 0.9%. It is down almost 4% in last one week. The drop was led by Investec whose shares nosedived 6% even as the company bucked a trend among rivals and declared dividend.

Bonds fell with the yield on the benchmark 2030 government issue up 2 basis point to 8.840%. (Reporting by Promit Mukherjee and Mfuneko Toyana; Editing by Toby Chopra and Alexandra Hudson)

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