Rand still vulnerable

Johannesburg – South Africa’s rand steadied against the dollar in early trade on Tuesday but traders said it remained vulnerable to a political crisis and fears of a sovereign credit ratings downgrade.

At 0700 GMT, the rand traded at 15.2025 per dollar, not far off its Monday’s New York close of 15.2150.

“The rand will still remain fragile as the political developments continue to unfold. Local markets have another short week ahead and we could expect liquidity to remain thin,” Nedbank analysts said in a note.

The rand has come under pressure following allegations that a family close to President Jacob Zuma influenced the firing of the finance minister in December, but South Africa’s ruling party said on Sunday that it had full confidence in Zuma.

Investors, however, fear further political uncertainty could hasten a credit ratings downgrade, potentially into “junk” territory, sharply raising South Africa’s borrowing costs.

On the stock market, the Top-40 index was down 0.47 percent, while the broader all-share fell 0.49 percent in early trade.

In fixed income, the yield for the benchmark instrument due in 2026 was down 2 basis points to 9.265 percent.