JOHANNESBURG: South Africa's rand weakened against the dollar on Friday as credit ratings downgrade fears weighed on sentiment, coupled with subdued risk appetite globally as investors prepared for a likely hike in US interest rates.
Stocks inched up supported by a rise in shares of conglomerate Bidvest Group ahead of its unbundling of it's food services business, Bidcorp, on the bourse.
At 1605 GMT, the rand traded at 15.6500 per dollar, 0.84 percent weaker from its New York close on Thursday.
"Local focus has been firmly on the impending announcements from the ratings agencies," Nedbank Capital analysts Mohammed Nalla and Reezwana Sumad said.
"The rand has thus far failed to extend any gains below the 15.5000 level. Markets have remained cautious ahead of the aforementioned from the ratings agencies." Standard and Poor's and Fitch, which both have South Africa just one step above subinvestment grade, are due to make public their decisions on its rating in June.
Fitch has not given a date for its next rating decision, but Finance Minister Pravin Gordhan said in a speech in Parliament on Thursday that the review was expected on June 8. S&P's review was due to be published on June 3.
The prospects of higher US interest rates after a string of Federal Reserve officials indicated that rates could rise as soon as June also hurt sentiment. Higher US interest rates undermine the attraction of riskier but high-yielding emerging markets assets.
Government bonds were mixed, and the yield for the benchmark instrument due in 2026 added 0.5 basis points to 9.385 percent. On the bourse, the benchmark Top-40 index rose 0.49 percent to 48,070 points, while the broader all-share firmed 0.34 percent to 54,105 points. Shares in Bidvest Group were up 4.03 percent at 370.33 rand.
Anglorand Asset Managers trader Peter Garmany said Bidvest benefited from investor appetite prior to the unbundling.
BidCorp, which supplies food to pubs, restaurants and hotels in South Africa, Europe and Asia, lists on May 30.
Trade volumes were below average, with about 215 million shares changing hands compared with last year's daily average of 280 million shares.
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