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JOHANNESBURG, March 27 (Reuters) - South Africa’s rand weakened more than 1% on Friday and stocks fell as the country reported its first two deaths from the coronavirus and a sharp jump in new infections just as a three-week national lockdown commenced to try to curb the outbreak.
At 1500 GMT the rand had weakened 1.61% to 17.5920 per dollar.
South Africans struggled to adapt to new confinement rules on Friday, with many city streets no less crowded than normal as a strict lockdown regime took effect. Meanwhile, the country recorded its first coronavirus deaths.
Market focus was also on a credit review due on Friday from Moody’s, the last of the top three agencies to rate South Africa’s debt at investment level. That is likely to add to downward pressure, traders said.
A Reuters poll of economists predicted on Friday that Moody’s will cut South Africa’s sovereign credit rating as a recession deepened by the impact of coronavirus frustrates economic reform efforts aimed at reducing government debt.
“It’s D-Day for South Africa, as not only is it the first day of lockdown, but Moody’s is also scheduled to announce the result of its highly anticipated credit-rating review that could see South Africa downgraded to junk status,” said Bianca Botes, treasury partner at Peregrine Treasury Solutions.
Bonds weakened after a rally in the previous session. The yield on the benchmark paper due in 2026 was up 15.5 basis points to 10.490%.
On the bourse, the Johannesburg Stock Exchange’s Top-40 index fell 4.7% to 39,172 points and the All-Share index weakened 4.7% to 42,947 points, led lower by financials which fell 11.7%.
Stocks faltered after a three-day rally as concerns around the spread of the coronavirus pandemic resurfaced.
Among the fallers, Absa Group dropped 10.8% to 71.99 rand and FirstRand weakened 10.6% to 38.64 rand. (Reporting by Mfuneko Toyana, Olivia Kumwenda-Mtambo and Tanisha Heiberg; Editing by Jan Harvey)
