Volatility on cards for rand
S&P Global cut may spell bad news for the currency
The rand weakened late on Monday immediately after ratings agency S&P Global Ratings cut SA’s credit rating to subinvestment grade, or junk status, to BB+ from BBB-. The currency reached R13.74/$ as the news broke, 2.85% lower on the day. The negative outlook remains in place, with S&P saying political risk was set to continue to be elevated in 2017. S&P’s announcement came after the JSE’s close. It said previously it would announce its rating decision in June. The rand had strengthened earlier in the day after losing 2% against the dollar in a volatile pattern analysts predicted for the next few months. Volatility was likely to be more common, rather than sustained weakness, after President Jacob Zuma dismissed Pravin Gordhan as finance minister, replacing him with Malusi Gigaba, analysts said. After losing 7.9% last week, the rand tumbled 2% to R13.6944/$ on Monday before recovering to R13.48/$ in late trade, 1% weaker on the day.
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