JOHANNESBURG: The rand fell to its weakest in nearly two weeks against the dollar on Friday, and analysts expect further losses next week if a US rate increase looks more likely or if ratings agencies give negative reviews on South Africa's credit rating.
Stocks ended more than 1 percent lower, with media and e-commerce group Naspers among the biggest losers. Mining companies took the most points off the benchmark index.
The rand touched a session low of 14.3960 to the dollar, its weakest since mid-November, and was trading down 0.23 percent on the day by 1506 GMT, at 14.3240. Government bonds followed suit, and the yield on debt due in 2026 climbed 4.5 basis points to 8.56 percent.
Analysts said the rand had pulled back from 14.4000 after some market players took month-end profit on long dollar positions. The next big push for the dollar is likely to come next Friday from the US non-farm payrolls report, which may strengthen the case for a rate increase by the Federal Reserve.
"We expect that players may hold off pushing the pair to fresh record highs until after the NFP next Friday, which will finally cement the Fed December rate hike decision and could see the pair above 14.5000," IGM analyst Christopher Shiells said.
"Also, the threat of a negative outlook from Standard's and Poor's on South Africa's BBB- investment grade rating on Friday, or a downgrade by Fitch to BBB-, also present upside risks to dollar/rand," Shiells added.
Earlier on Friday, South African the central bank's deputy governor, Francois Groepe, said the potential for sizable portfolio outflows and a subsequent decline by the rand as US rates started to rise would pose an upside risk to the inflation outlook.
In stocks, the blue-chip JSE Top-40 index was down 1.17 percent at 46,3247 and the broader All-share index fell 1.13 percent to 51,637.
Anglo American fell 5.26 percent to 87.22 rand after its London-listed parent company said it would shut down an Australian coal mine.
Rival BHP Billiton shed 3.31 percent to 173.82 rand.
"A lot of action is the mining sector again. The sector has been rattled by what's being going in China," said Jill Ronquest, a trader at Avior Capital Markets.
Chinese shares slumped 5 percent on Friday, hit by regulatory and industrial sector worries, but the declines did not carry through to other major equity markets.
Naspers shares fell 3.68 percent to 2,143.15 rand after the e-commerce company said it might raise $2.5 billion to fund acquisitions.
More than 299 million shares changed hands, above last year's daily average of 183 million. (Reporting by Mfuneko Toyana and Stella Mapenzauswa, editng by Larry King) -Reuters
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