World Markets

Positive China data lifts South African rand ahead of Moody's review

Credit: REUTERS/Thomas White

South Africa's rand firmed on Friday as an unexpected bounce in Chinese factory activity helped offset concerns over prospects of a U.S.-China trade pact and skittishness ahead of a long-awaited decision on South Africa's credit rating.

JOHANNESBURG, Nov 1 - South Africa's rand firmed on Friday as an unexpected bounce in Chinese factory activity helped offset concerns over prospects of a U.S.-China trade pact and skittishness ahead of a long-awaited decision on South Africa's credit rating.

* The rand ZAR=D3 traded at 15.0600 versus the greenback by 0505 GMT, 0.31% stronger compared with the previous day's close.

* The currency had been losing ground following a bleak budget speech on Wednesday, where Finance Minister Tito Mboweni slashed growth forecasts and predicted ballooning debt.

* That raised fears that South Africa could lose its last investment-grade credit rating on Friday, when Moody's is set to announce its ratings decision following a review, also knocking confidence in the rand.

* However, investor sentiment was given a boost on Friday after a survey showed that manufacturing activity in China expanded at its fastest pace in more than two years in October, lifting Asian shares.

* Throughout the day, though, the rand is likely to be driven by Moody's decision. Peregrine Treasury Solutions said in a note there was no telling the impact a negative adjustment in its rating could have: "For now, it's just sit back and hold tight, with a new support level of R15.00 having been set."

* Government bonds inched lower, with the yield on benchmark 2026 instrument rising 1 basis point to 8.505%. ZAR186=

(Reporting by Emma Rumney; Editing by Aditya Soni)

((Emma.Rumney@thomsonreuters.com; +27115952832;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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