JOHANNESBURG: South Africa's rand briefly touched an all-time low against the greenback despite broad based dollar weakness on Tuesday, with traders citing nervousness ahead of credit ratings reviews on Friday which could see a downgrade for South Africa.
Stocks fell, led by financials which tracked global markets as investors had second thoughts about sky-high expectations of European Central Bank easing this week.
The rand briefly touched 14.4950 against the dollar, its weakest on record according to Thomson Reuters data, before pulling back to 14.4570 by 1442 GMT, close to where it ended Monday trade.
"We are waiting to see what our rating agencies are going to do. Is it going to go to junk or not? That is what is putting the pressure on the currency," Bidvest Bank chief dealer Ion de Vleeschauwer said.
"Everybody is sitting on the edges of their seats and hoping for no change from the agencies."
Investors are bracing for a possible credit downgrade from on Friday from Fitch, which rates South Africa at BBB with a negative outlook and has previously warned of a downgrade, citing a negative economic news flow this year.
Standard & Poor's is unlikely to change its own BBB- rating but could downgrade its outlook on Africa's most industrialised but struggling economy to "negative" from "stable".
Government bonds were slightly firmer across the curve after recent losses, with the yield for debt due in 2026 dipping 1 basis points to 8.615 percent.
On the bourse, data showing record low unemployment from Germany fed fears that ECB stimulus could be overdone. This could reduce the amount of cash printed available for institutions such as banks.
The financial index fell 0.47 percent led by Firstrand, which fell by 1.5 percent to 46.29 rand, while Nedbank lost 1.4 percent to 207.95 rand.
The benchmark Top-40 index was down 0.07 percent to 46,295 points while the All-share index declined 0.14 percent to 51,535 points.
Among the gainers, BHP Billiton led gainers on the blue-chips index, up 2.94 percent to 171.31 rand, as the company announced plans to lower production costs and increase output at its copper business.
Market activity was relatively robust with more than 310 million shares traded, above last year's daily average of 183 million.
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