Rand firms as dollar rally cools, S&P review due

The rand gained on Friday as the US dollar slipped, but analysts said pressure could soon build again as bets on US president-elect Donald Trump's policies remain a key market driver.

On Friday afternoon the rand traded at 18.1450 against the dollar, about 0.6% stronger than its previous close.

“The rand is seeing a boost today [Friday] as the dollar rally pauses. Profit-taking before the weekend might be influencing this but it's likely to be temporary,” said Zain Vawda, market analyst at MarketPulse by OANDA.

The rand endured five consecutive sessions of losses until Friday, losing about 5% against the dollar, as the US currency surged after Trump's election victory.

Global markets remain focused on the impact of Trump's win, with the dominant view that after he takes office in January his policies could stoke US inflation, meaning fewer Federal Reserve interest rate cuts.

Locally, investors will look to S&P Global's scheduled review of South Africa's sovereign credit rating on Friday.

Analysts expect Africa's most industrialised economy to remain three notches into sub-investment grade at “BB-", with a stable outlook.

“An upgrade is unlikely. As things stand, risk remains skewed towards further rand weakness,” Vawda added.

Next week, South Africa-focused investors will look to October's inflation print on Wednesday and the SA Reserve Bank's monetary policy decision a day later.

The central bank is expected to cut the repo rate by 25 basis points, the same size cut as in September, according to a Reuters poll of economists published on Friday.

On the Johannesburg stock market, the blue-chip Top-40 index was up about 0.1%.

South Africa's benchmark 2030 government bond was flat, with the yield at 9.135%.