JOHANNESBURG (Reuters) – South Africa’s rand began the week on the back foot as investors calculated the economic impact of China’s spreading virus outbreak, while a sluggish outlook for the local economy added further strain on the currency on Monday.
* At 0702 GMT, the rand traded at 14.4800 versus the dollar, 0.59% percent lower than its New York close on Friday.
* Global markets tumbled on Monday as investors grew increasingly anxious about the economic impact of the outbreak of coronavirus, with demand spiking for safe-haven assets.
* A weak growth outlook for the South African economy also weighed on demand for rand assets, after the International Monetary Fund and South African Reserve Bank downgraded their growth predictions earlier this month.
* “The domestic situation will increasingly come to the fore as the February budget nears, with most analysts attempting to ascertain how Moody’s will receive the budget, with Moody’s set to make a call on the country’s final investment-grade rating in March,” said NKC African Economics in a morning note
* The rand is expected to trade in the rand of 14.35 to 14.55 rand to the dollar on Monday, NKC African Economics said.
* Government bonds weakened, with the yield on the benchmark instrument maturing in 2026 up 4 basis points to 8.135%.
* Stocks opened lower in early trade on Monday with the Johannesburg Stock Exchange’s Top-40 index down 1.44% at 50,389 points.
Reporting by Tanisha Heiberg; Editing by Catherine Evans