THE rand maintained a weaker bias against the major currencies on Friday afternoon, with market tensions high ahead of the much-anticipated verdict from ratings agency Standard & Poor’s (S&P) on South Africa’s credit and growth outlook.
At 3.52pm the rand was at R10.7936 against the dollar from R10.6659 on Thursday.
Against the euro‚ it was at R14.6200 from its previous close of R14.4569 and at R18.3075 to the pound from R18.0492 on Tuesday.
The euro was at $1.3544‚ from $1.3550 on Thursday.
S&P is likely to announce a downgrade to the country’s sovereign rating, according to market expectations.
Earlier Fitch maintained its rating on South Africa’s longer term foreign and local currency, but revised its outlook from stable to negative. The rating’s agency also lowered its growth forecast for the local economy this year to 1.7% from 2.8% previously, citing weak economic growth‚ large current and budget deficits‚ and strikes for its decision.
Lower ratings imply higher borrowing costs for government.
“If South Africa avoids a downgrade, we expect the rand to head back to R10.30/$. On the other hand, the rand could weaken towards the R11.00/$, depending on the severity of the downgrade, Barclays Africa wrote in a note on Friday.
The rand last traded at R10.30/$ on May 26 and weaker than R11/$ in February.
S&P is expected to announce its ratings decision at 6pm, after the local market closes.