JOHANNESBURG (Reuters) -The rand slipped after rallying to its strongest level in more than two years, as traders locked in profits on Friday and awaited S&P Global’s scheduled review of South Africa’s sovereign credit rating with caution.
At 1432 GMT, the rand traded at 17.17 against the dollar, about 0.7% weaker than Thursday’s close.
South Africa could secure its first credit rating upgrade in nearly two decades on Friday when S&P Global delivers its latest sovereign rating decision, amid investor optimism over its reform efforts.
Since 2020, the Southern African country has been rated as sub-investment grade – or “junk” – by all three major rating agencies. Analysts, however, now see grounds for an upgrade by S&P to ‘BB’ from ‘BB-‘, citing fiscal consolidation and policy improvements.
The economic calendar next week will feature October consumer inflation figures and September retail sales data on Wednesday, followed by the central bank’s interest rate decision on Thursday.
“Given the generally benign environment, we believe the MPC will cut by 25-bps, moving the real policy rate closer to neutral,” said Nedbank economists in a research note.
On the Johannesburg Stock Exchange, the Top-40 index was last down 2.5%, also shedding some of its recent gains.
South Africa’s benchmark 2035 government bond also weakened, as the yield rose 5.5 basis points to 8.66%.
(Reporting by Sfundo Parakozov and Anathi Madubela;Editing by Joe Bavier and Leroy Leo)
