Rand leads emerging-market peers after bump by Moody’s bump

The rand was firmer on Monday afternoon, and easily the best performing emerging-market currency.

The rand is in favour after Moody’s Investors Service opted not to review SA’s credit status, having gained about 20c against the dollar compared to where it closed on Friday evening.

The benchmark R186 government bond has also improved to a 10-month low.

The reduced threat of SA falling off global bond indices was boosting the rand and local bonds, but the question has now turned to when Moody’s releases it rating, said Monex Europe market analyst Simon Harvey. Load-shedding, as well as local economic growth, would also be watched.

At 2pm the rand had strengthened 1.11% to R14.1815/$, 1.2% to R15.9265/€ and 0.67% to R18.5987/£. The euro was flat at $1.123.

The R186 was bid at 8.51% from 8.595%.

Global sentiment was boosted on Monday by positive Chinese data.

Emerging-market sentiment, however, was under pressure after  the Turkish local government elections at the weekend. The results of the polls included setbacks for the ruling party of President Recep Tayyip Erdoğan, weakening the lira.

Erdoğan is seen to have sought to intervene in that country’s monetary policy. Analysts said the electoral result may prompt further populist policies.

Focus this week remains on Brexit, with the UK Parliament expected to hold a series of votes seeking to chart a way forward.

US-China trade talks also continue, while the week will see a raft of data releases, including US jobs numbers on Friday.

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