Rand treads water as investors digest S&P decision
The rand was a little weaker on Monday morning after strengthening markedly on Friday due to disappointing employment figures from the US and a decision by S&P Global Ratings to keep SA’s sovereign credit ratings at their current levels.The US Labour Department said on Friday that nonfarm payrolls rose by a seasonally adjusted 38‚000 in May‚ the weakest performance since September 2010. Economists had expected the market to have added more than 150‚000 jobs.The data caused the dollar to weaken against the euro‚ which subsequently provided a boost for the rand. The dollar‚ however‚ strengthened at the weekend‚ keeping gains in the rand in check. SA received a stay of execution from S&P Global Ratings‚ which on Friday evening affirmed SA’s investment grade rating‚ but sounded warnings about SA’s low growth and rising political tension.Fitch global ratings is expected to release its latest review on SA’s rating on Tuesday or Wednesday. Its current rating has SA on BBB-‚ with a stable outlook.At 8.13am‚ the rand was at R15.1388 to the dollar from R15.0845 at Friday’s close. It was at R17.1699 against the euro from R17.1321 previously‚ and at R21.7782 against the pound from R21.826 previously.The euro was at $1.1342‚ from $1.1357 previously.Citadel chief strategist Adrian Saville said although SA was vulnerable in some areas‚ an analysis of the rand suggested that "this is by no means the picture of a country — or currency — that is in the business of falling over"."SA is doing what it has done for decades: it is muddling along‚ escaping disaster but avoiding a miracle‚" Saville said.He said that despite some slip-ups‚ SA was making progress in areas of policy. "With the firm hands of (Finance Minister) Pravin Gordhan and (Reserve Bank governor) Lesetja Kganyago on our policy tillers‚ and sound monetary policy‚ these factors should conspire to help the rand recapture its purchasing power parity‚ which translates into the rand being a stronger currency than recent experience — and current prices — suggest." - TMG Digital/BDlive..
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