BRUCE WHITFIELD: The gossamer thread supporting the rand
So why has the rand not collapsed in a suppurating heap following South Africa's double debt downgrades?
So why has the rand not collapsed in a suppurating heap following South Africa's double debt downgrades? There are a couple of reasons and, if we play our cards right (how many times have you heard that over the past 15 months), we might just be able to stave off a calamitous currency collapse. So far, just Fitch has put South Africa's foreign and local currency debt into the relegation zone of sub-investment grade. S&P Global Ratings has downgraded our foreign debt only, and because 90% of our debt is in rands, it means it retains a gossamer-thin grip on investment grade. That is a primary reason for a surprisingly modest 10% decline in the value of the rand over the past three weeks. There is still some R3-billion a day in foreign bond purchases - more than R30-billion has been invested since former finance minister Pravin Gordhan's now-infamous recall from London. That's because foreign bond investors are obliged to buy, given that we remain in several key bond indices. If two ra...
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