Rand flat as negative sentiment takes hold
The rand was little changed against major global currencies on Monday morning, ahead of what may be a volatile week for the local currency.
Political risk in Europe and the Middle East, and looming midterm elections in the US all lie ahead for local investors, with the rand recently under strain after the medium-term budget policy statement (MTBPS).
Rising deficits locally may be sufficient for ratings agency Moody’s to downgrade SA’s credit outlook from stable to negative, said Nedbank Corporate and Investment Banking strategists Mehul Daya and Walter de Wet. Although SA should retain its investment grade ranking, this should ensure that any rallies in the rand are short-lived.
Global focus on Monday was on further political difficulties in Germany for Chancellor Angela Merkel, whose party suffered a decline in regional elections at the weekend.
“We’re likely in for another turbulent week in financial markets as investors continue to try and navigate incoming news and data and determine just how bad the sell-off is going to be,” said Oanda analyst Craig Erlam.
Global stocks came under selling pressure last week, as investors became increasingly concerned that trade conflict has slowed global economic growth.
At 9.30am the rand was at R14.5583 to the dollar from R14.5749, at R16.6111 to the euro from R16.6134 and at R18.6858 to the euro from R18.6947. The euro was at $1.141 from $1.1397.
The benchmark R186 government 10-year bond was last seen at 9.27% from 9.32%.
Source: businesslive.co.za
