March 3, 2020 / 3:54 PM / a month ago

UPDATE 1-South Africa's rand falls as economy slips into recession

(Updates prices)

JOHANNESBURG, March 3 (Reuters) - South Africa’s rand weakened on Tuesday as data showed the economy entered its second recession in two years in the final quarter of last year, while stocks edged higher.

At 1716 GMT the rand was 0.55% weaker at 15.4700 per dollar, after hitting a session low of 15.6250 in the immediate aftermath of the recession news.

The recession is another setback for President Cyril Ramaphosa’s efforts to revive the economy and stave off a downgrade of the country’s sovereign debt to below investment grade by rating agency Moody’s.

“The road ahead for rand will be filled with many obstacles as investors question whether Moody’s will leave or downgrade South Africa’s last credit rating on March 27,” said Lukman Otunuga, senior research analyst at FXTM.

“In regards to the technical picture ...falling confidence over the economy in the face of domestic and external risks may weaken the local currency with 15.80 acting as the first level of interest.”

Moody’s is the last of the top three agencies to rate the country’s debt at investment level, and it is set to assess the rating in March.

Stocks closed higher, with the Johannesburg Stock Exchange’s Top-40 index rising 2.2% to 47,671 points and the broader all-share index closing up 2.16% at 52,958 points.

The rise was led by miners AngloGold Ashanti, which rose 7.45%, and Anglo American Platinum, up just over 6%.

Nedbank was the only company on the index whose shares fell on Tuesday, after it reported a near 7% drop in profits. Its shares closed down 2.28%.

Bonds were firmer, with the yield on the benchmark 2026 government issue down 21 basis points to 7.945%. (Reporting by Olivia Kumwenda-Mtambo and Emma Rumney, Editing by William Maclean)

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