May 25, 2018 / 3:32 PM / 3 months ago

UPDATE 1-South African rand dips ahead of S&P rating review, stocks rise

(Updates prices)

JOHANNESBURG, May 25 (Reuters) - South Africa’s rand weakened in cautious trade on Friday as investors took profits from a rally in the previous session ahead of a ratings review decision by S&P Global Ratings.

At 1522 GMT the rand was 0.62 percent weaker at 12.5000 to the dollar. That was down from Thursday’s one-week high of 12.3850, touched briefly as the South African Reserve Bank kept interest rates unchanged, citing slightly higher inflation risks.

“The foreign exchange market was unimpressed by the (central bank) meeting. This is unlikely to change today in the regular review of the country rating by rating agency Standard & Poor’s,” Commerzbank analysts said in a note.

S&P publishes its review of the country’s credit rating after local markets close.

The firm rates South Africa’s foreign currency debt ‘BB’ and its local currency debt ‘BB+’, having downgraded the country to below “junk” status last year following a deterioration in the economic outlook and public finances.

Africa’s most industrialised economy has barely grown in the past decade, with fiscal missteps and government corruption contributing to weak business and consumer confidence.

President Cyril Ramaphosa has pledged to clean up the graft and misgovernance that critics say bedeviled the administration of his predecessor Jacob Zuma, who was forced from office in February by the ruling African National Congress (ANC).

Government bonds firmed, with the yield on the benchmark issue due in 2026 <ZAR186= > falling one basis point to 8.45 percent.

Stocks rose as global markets steadied, but platinum producers stumbled as the spot price of the precious metal fell over 1.4 percent below $900 an ounce.

Sibanye-Stillwater fell 5.1 percent to 7.59 rand while Johannesburg-listed shares of Lonmin shed 4.7 percent. Anglo American Platinum lost 2.6 percent.

Johannesburg’s benchmark Top-40 index ended 0.39 percent higher at 50,541.99, while the wider All-share index advanced 0.38 percent to 56,916.97. (Reporting by Olivia Kumwenda-Mtambo and Ed Stoddard Editing by Gareth Jones)

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