The rand was a little perkier on Monday morning, after S&P Global Ratings left SA’s debt rating unchanged on Friday as expected.
This will be viewed as positive for President Cyril Ramaphosa, who marked his 100th day in office at the weekend.
S&P, which still rates the country’s debt at subinvestment grade or so-called junk, acknowledged Ramaphosa, who has overseen major changes at state-owned entities (SOEs), as well some state institutions, such as the South African Revenue Service.
The changes are aimed at restoring sound corporate governance at SOEs, thus enabling them to return to good financial health. Power utility Eskom, arms manufacturer Denel and South African Airways have had their boards reconstituted in recent months.
Eskom, in particular, has previously been singled out as posing a big risk to the fiscus, after years of corruption allegations under former President Jacob Zuma’s term in office.
Surveys of business and consumer confidence have increased under Ramaphosa, which have the potential to lift economic growth, which is key to ratings agencies.
But recent global developments have somewhat tempered the so-called “Ramaphoria”, with the rand weakening markedly and government bond yields rising.
The global market volatility and its net effect on the rand and inflation outlook led the Reserve Bank to be hawkish over the past week, a scenario that looked unlikely a few months ago.
Higher oil prices have recently come into the equation, though they have pulled back significantly from last week amid expectation that major oil producers could ramp up oil output to compensate for the potential shortfall from countries including Iran and Venezuela.
With two major centres of financial markets — the UK and the US — shut for holidays on Monday, markets were less likely to make significant headway in either direction.
The yield on the R186 bond was little changed in early trade at 8.43%, after rising sharply over the past few weeks.
At 10.12am, the rand was at R12.4535 to the dollar from R12.4897, R14.5557 to the euro from R14.6196 and R16.5831 to the pound from R16.6441.
The euro was at $1.1688 from $1.1687.