South Africa’s rand weakened in cautious trade early on Friday as investors took profits from a rally in the previous session ahead of a ratings decision by S&P Global. At 0640 GMT the rand was 0.42 percent weaker at 12.4675 to the dollar. That was down from Thursday’s one-week best of 12.3850, touched briefly as the South African Reserve Bank kept interest rates unchanged, citing slightly higher inflation risks.
The rand has attracted some short interest in lieu of any major domestic drivers in the past two weeks, with some traders targeting the 12.40 mark as a sell point, with an eye on the rampant dollar and overall risk sentiment.
“The foreign exchange market was unimpressed by the (central bank) meeting. This is unlikely to change today in the regular review of the country rating by rating agency Standard & Poor’s,” Commerzbank analyst Elisabeth Andreae said in a note.
S&P’s publishes its reviews of the country’s credit rating after market close.
The firm cut Pretoria’s local currency debt to “junk” status in November and said in March that it would be nowhere near to upgrading the rating until reforms under new President Cyril Ramaphosa took shape.
