Rand little changed before Moody’s credit review

The rand was steady on Thursday after plunging the day before, when Finance Minister Tito Mboweni gave a bleak budget speech where he slashed growth forecasts and predicted ballooning debt.

Read: A decade of budgetary whoppers

At 0720 GMT the rand was up 0.05% to 14.99 per dollar after reaching a two-week low of 15.12 on Wednesday, its worst one-day decline in more than a year.

Mboweni cut the forecast for 2019 economic growth to 0.5% from 1.5%, put debt at over 70% of gross domestic product in the next two years and the budget deficit at 5.9% – its highest since the 2009 global financial crisis.

The rand began tumbling before Mboweni had finished his speech and by the end had lost more than 3%. Bonds yields spiked as investors faced the prospect of South Africa’s losing its last investment-grade rating, from Moody’s.

“Trying to hang onto a long dollar position was close to impossible as everyone scrambled to the exit door,” said Standard Bank chief trader Warrick Butler in a note.

“I will bet my last dollar that Moody’s will now move the country to negative watch. Something that before yesterday’s MTBPS (budget) was only a 40% probability has now become an almost guaranteed outcome.”

Moody’s is due to give a credit review on Friday.