Rand firms as investors await next bout of weakness
South Africa’s rand was firmer early on Friday, adding to the previous session’s gains in a recovery driven mainly by investors covering their short positions in anticipation of sharper falls as local and global growth fears loom.
At 0650 GMT the rand was 0.57% firmer at 15.19 per dollar compared with a close of 15.28 overnight in New York, bringing gains to more than 1.5% since Wednesday when the currency tumbled to just short of 11-month lows.
The rand has fallen more than 9% since the beginning of August, pressured by the rising likelihood of a credit ratings downgrade by linked to massive, additional bailout to state power firm Eskom and, this week, by signs of slower global growth.
With fundamentals and sentiment pointing to further rand weakness, many traders see a short term rally, with buyers coming in at current prices before the next tranche of losses.
Bonds also firmed, with the yield on the benchmark 10-year government paper due in 2026 down 4 basis points to 8.395%.
In stocks, petrochemical giant Sasol said it would delay the release of its 2019 financial results due to possible “control weaknesses” at its US ethane cracker project.