The rand was steady on Friday morning‚ displaying no sign of panic despite the deterioration in global sentiment.
The concern about a trade war between the US and China sent markets into a tailspin‚ a scenario that would ordinarily play out negatively for the rand as one of the most liquid emerging market currencies.
On Thursday‚ US President Donald Trump announced plans to slap tariffs on up to $60bn in China’s imports‚ triggering an opening shot of counter measures from China.
Markets fear that a tit-for-tat spectacle between the world’s two largest economies could hurt global growth.
As the sell-off on global equities gathered momentum‚ traditional safe assets were supported‚ notably the yen.
But the rand stood its ground‚ just hours before Moody’s releases results of its review on SA’s debt rating. Moody’s is the only one of the big ratings agencies to still rate SA one notch above junk.
“For now we are of the opinion that SA has done enough not to be downgraded and bought itself a little extra time‚” said Wichard Cilliers‚ head of dealing and a director at TreasuryOne.
“We do think that Moody’s will emphasise the need to keep spending under control and also to better management at SOEs [state-owned enterprises]. We also feel that the market has priced most of this in at the moment‚ but we can see the rand test better levels on the back of this.”
At 8.38am‚ the rand was at R11.8309 to the dollar from R11.8493‚ R14.6014 to the euro from R14.5849 and at R16.7078 to the pound from R16.7047.
The euro was at $1.2342 from $1.206.
Source: TMG Digital.