June 14, 2017 / 7:03 AM / 2 months ago

S.Africa's rand clings on to gains despite downgrade fallout

JOHANNESBURG, June 14 (Reuters) - South Africa's rand edged firmer on Wednesday, clinging on to recent gains despite continued fallout triggered by a Moody's ratings downgrade last week and an anticipated interest rate hike by the U.S. Federal Reserve.

* At 0640 GMT, the rand traded 0.2 percent firmer at 12.7350 per dollar compared to close of 12.7600 overnight in New York, bringing weekly gains to around 1.3 percent.

* Following a one notch downgrade to its lowest sovereign investment grade on Friday, Moody's cut the ratings of a dozen banks and companies including embattled power utility Eskom, further shaking confidence in Africa's most advanced economy.

* Quarterly business confidence and April retail sales due in the session are expected to shed more light on ailing economy. Growth shrunk 0.7 percent in Q1 2017 after a 0.3 percent contraction in Q4 of 2016.

* Traders expect the U.S. central bank to increase interest rates by a notch when it concludes a policy meeting on Thursday, a move that could dampen demand for high-yielding emerging market assets.

* South African bonds were flat, with the yield on benchmark 2026 government bond inching up 0.5 basis points to at 8.445 percent.

* Stocks set to open higher at 0700 GMT, with the JSE securities exchange's Top-40 futures index up 0.3 percent. (Reporting by Mfuneko Toyana; Editing by Ed Cropley)

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