The rand was 1% weaker against the dollar on Friday afternoon amid rumours in the market that ratings agency S&P Global intended to downgrade SA’s local currency to junk status later in the day. According to unconfirmed reports, Moody’s will keep its comparable rating unchanged. This outcome would be more positive than if S&P Global and Moody’s both downgraded the local currency rating, which would lead to SA’s elimination from the Citigroup’s world government bond index. Estimates of the consequences vary, but an outflow of about R100bn from the local bond and currency markets is possible. SA’s foreign currency rating has already been downgraded to junk status by Fitch, which was re-affirmed on Thursday. Ashburton analysts said a double-downgrade by both agencies was "a low probability event". However, they do expect the downgrade by both before June 2018. "That is unless we see significant alterations in policy and local economic forecasts." At 3pm, the rand was at R14.0162 to the...
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