GFIELDS: 6,908 -127 (-1.81%)
South Africa's rand drops to 11-month low as growth outlook darkens
(Recasts with milestone)
JOHANNESBURG, Aug 7 (Reuters) - South Africa's rand fell to
touch an 11-month low on Wednesday, rocked by deepening concerns
about the outlook for domestic growth against a backdrop of
uncertainty for emerging markets more broadly.
The rand dropped to 15.1825 per dollar, its lowest
since September 2018. By 1507 GMT it had recovered ground to
trade at 15.0875.
The rand dropped for a seventh straight day, suffering in
the light of more poor data for Africa's most industrialised
economy, as South African business confidence fell.
Unemployment is at its highest in over a decade, data last
week showed, while an earlier release showed the economy shrank
in the first quarter.
In comments made shortly before the rand hit its new low,
South Africa Reserve Bank Governor Lesetja Kganyago said on
Wednesday that despite South Africa's problems, it did not need
aid from the IMF.
The rand has also come under pressure from credit rating
agencies. Moody's on Tuesday said struggling state power utility
Eskom, regularly cited as a major risk for South Africa's
outlook, urgently needs a turnaround plan as its capital
structure is unsustainable.
Moody's, scheduled to review South Africa's rating in
November, is the last of the three big international ratings
agencies to have South African debt at investment grade.
"Their concerns are worrisome as being the only house not to
have us on non-investment grade could change come November,"
Oliver Alwar, senior trader at Standard Bank, said in a note.
South Africa's rating with S&P Global Ratings and Fitch has
been non-investment grade since 2017.
In fixed income, the yield on the benchmark government due
in 2026 dipped 5.5 basis points to 8.375%.
Emerging market currencies are down 1% this
week and some analysts also pointed to comments by U.S President
Donald Trump that the Federal Reserve must cut rates "bigger and
faster" as fuelling safe haven trades.
"With Donald Trump's efforts to put pressure on the Federal
Reserve Bank coming into focus... an emerging market selloff has
hit the local unit," Bianca Botes, Treasury Partner at Peregrine
Treasury Solutions, said in a note.
"This has only served to add fuel to the fire of an already
fragile situation as the trade war continues unabated while
global growth fears are further driving uncertainty."
On the bourse, stocks closed stronger but relatively flat
with the Johannesburg Stock Exchange's All-Share index
up 0.3% to 55,225 points, while the Top-40 index
gained 0.29% to 49,253 points.
One of the biggest winners among blue chip firms was Amplats
which gained 5.9% to 882.62 rand, while AngloGold
rose 4.78% to 320.01 rand - its highest in two years.
Gold Fields, nother also increased 4.29% to 90.85
The Johannesburg Gold index also climbed to a
two-year high as it increased 4.45% to 2502.35 points.
"When there's nervousness, gold is always the first point of
call," said Ryan Woods, a trader at Independent Securities.
"It's a bit of a pity we're no longer a major player in that
space, so we are not really going to benefit from the mines," he
($1 = 14.9226 rand)
(Reporting by Alistair Smout and Olivia Kumwenda-Mtambo;
additional reporting by Marc Jones and Onke Ngcuka
Editing by Raissa Kasolowsky and Stephen Powell)
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