Rand lifted by vaccine hopes, shrugs off downgrades

23rd November 2020 By: Reuters

The rand opened stronger on Monday, lifted by global optimism over coronavirus vaccines and shrugging off ratings downgrades that are likely to push up government borrowing costs.

At 07:02 GMT, the rand traded at 15.3700 versus the dollar, 0.4% firmer than its previous close.

The upbeat global market mood comes after a top official of the US government's vaccine development effort said on Sunday that the first vaccines could be given to US healthcare workers and others recommended by mid-December.

That outweighed the domestic impact of downgrades by Fitch and Moody's deeper into "junk" territory on Friday that the Finance Minister called painful.

S&P Global affirmed its rating on Friday.

The public finances of Africa's most industrialised economy were in bad shape before the Covid-19 pandemic and have deteriorated sharply since. This year's budget deficit is seen at more than 15% of GDP.

Later in the week, investors will look to consumer and producer price index data for clues about price pressures in South Africa. Last week the central bank held its main lending rate at 3.5%.

Government bonds were marginally weaker, as the yield on the 2030 bond rose three basis points to 8.845%.