At 1500 GMT, the rand was 0.22% firmer at R14.2880 per dollar from an opening level of R14.3050.

Fitch on Wednesday affirmed South Africa’s long-term foreign and local currency debt ratings, helping lift the rand to a four-and-a-half month high against a backdrop of mildly positive global sentiment.

The rating agency sounded a cautionary note about the bailouts of state firms, however, saying the government needed to quickly implement a plan to cut debt and expenditure, with notable progress expected by February when the treasury publishes its annual budget.

“The February budget event risk seems to be leading to a far more consolidative environment,” said economists from ETM Analytics in a note.

“In this context South Africa’s high yields seem to be driving some outperformance in the spot markets as carry traders seem to be capitalising in the short term.”

Stocks ended a three-day winning streak, with Ascendis Health leading the decliners.

Shares of the health and pharmaceuticals group hit their lowest this year, closing down 17.47% at R1.37, after it failed to agree terms with a preferred bidder for the disposal of its Remedica business in Cyprus.

The benchmark JSE Top-40 Index was down 0.38% at 51,268 points while the broader All-Share Index was down 0.36% at 57,558 points.

Other emerging market equities also retreated on Wednesday as investors took cash off the table in the run-up to the Christmas holiday season.

Bonds firmed, with the yield on the 2026 government paper down 0.5 basis points at 8.28% while the yield on the 2030 instrument fell 4 basis points to 9.06%.

EWN