S.African rand firmer as China rate cut soothes virus anxiety

JOHANNESBURG (Reuters) – South Africa’s rand firmed on Monday, as China stepped in to shield the world’s second-largest economy from the impact of the coronavirus outbreak, lifting global risk appetite.

China’s central bank cut the interest rate on its medium-term lending on Monday as policymakers sought to cushion the drag on businesses from the outbreak that has severely disrupted activity.

As of 0645 GMT, the rand was 0.55% firmer at 14.8580, adding to gains from Friday’s session spurred by the largely positive reception of President Cyril Ramaphosa’s State of the Nation speech promising faster economic reforms.

The rand and fellow emerging market currencies had weakened amid investor fears that the outbreak could hit China’s economic growth and exports from countries such as South Africa, which relies on commodity sales to the Asian giant.

South African President Ramaphosa acknowledged in his annual address to parliament that growth had stalled, promising to fix its strained public finances and procure more renewable energy to address a power crisis.

“In many ways, this is a calm before the next storm – as next week,” Siobhan Redford of Rand Merchant Bank said, referring to the budget speech.

“Eyes will once again turn to Parliament as Finance Minister, Tito Mboweni, delivers a much-anticipated budget. So, in the absence of significant political news, domestic financial markets are likely to be driven by global sentiment.”

Bonds were slightly weaker with the yield on the benchmark government bond due in 2026 adding 1.5 basis points to 7.965%.

Among equities, miner Anglo American Platinum said Chief Executive Officer Chris Griffith will step down on April 16 to pursue other career opportunities, sending its shares up 0.6%.