Rand comes off best levels as business confidence slumps
The Bureau for Economic Research’s business confidence index dropped to 21 points in the third quarter, a 20-year low
The rand was weaker against the dollar on Wednesday afternoon, but was still hovering not far off its best levels in more than a month after Moody’s Investors Service eased downgrade fears.
Moody’s said on Tuesday that SA is safe from a credit-ratings downgrade for the next 12-18 months. Moody’s is the only global credit-ratings agency that has not downgraded SA to below investment grade.
“The news that a downgrade from Moody’s Investors Service was not a dead certainty despite decreasing their growth rate for SA accounted for some of the rand gains overnight as well as some good news on the trade front,” said TreasuryOne senior currency dealer Andre Botha.
Earlier, the Bureau for Economic Research’s business confidence index (BCI) dropped to 21 points in the third quarter from 28 in the previous one, its lowest level in 20 years. The expectation was for business confidence to remain unchanged, according to a Bloomberg consensus.
The SA Chamber of Commerce and Industry BCI, which was also released on Wednesday, fell to 89.1 points in August from 92 in the previous month, its lowest level in 34 years.
On Wednesday, China exempted 16 types of US products from additional tariffs, which will be effective as of September 17.
The rand reached R14.60/$ during Wednesday’s morning session, its best level in more than a month.
The European Central Bank (ECB) is expected to announce its decision on monetary policy on Thursday amid speculation that the bank may put in place stimulus measures.
“Investors are expecting the full [ECB president] Mario Draghi bazooka at his penultimate meeting, something to complete the highlight reel from a remarkable eight years,” Oanda senior market analyst Craig Erlam said.
At 3.22pm, the rand had weakened 0.61% to R14.7331/$, 0.19% to R16.2007/€, and 0.38% to R18.1637/£. The euro was flat at $1.10996.
Gold was up 0.27% to $1,489.37/oz and platinum 0.59% to $937.61. Brent crude lost 0.16% to $62.70 a barrel.