Forex News

Live Forex news from all over the world.

    Archives

South African Rand Jumps More Than 2%

November 27, 2017 at 13:24 by Vladimir Vyun

A fan of ZAR billsThe South African rand jumped more than 2% versus the US dollar today after plunging 2% on Friday. The rand reached the highest level in a month and demonstrated the biggest jump in more than eight months. The moves of the currency was a reaction to decisions of rating agencies.

The rand slumped on Friday after Standard & Poor’s downgraded South Africa’s sovereign credit rating to junk:

The long-term local currency sovereign credit rating was lowered to ‘BB+’ from ‘BBB-‘ and the short-term local currency sovereign credit rating was lowered to ‘B’ from ‘A-3’. The outlook is stable.

The S&P explained its decision:

The downgrade reflects our opinion of further deterioration of South Africa’s
economic outlook and its public finances.

But the currency jumped after Moody’s Investors Service announced that it maintained the nation’s credit grade intact, though put it on a review for downgrade:

Moody’s Investors Service has today placed the Baa3 long-term issuer and senior unsecured bond ratings of the government of South Africa on review for downgrade.

Despite the good news, Moody’s outlook for South Africa’s economy was not bright either:

The decision to place the rating on review for downgrade was prompted by a series of recent developments which suggest that South Africa’s economic and fiscal challenges are more pronounced than Moody’s had previously assumed. Growth prospects are weaker and material budgetary revenue shortfalls have emerged alongside increased spending pressures.

Overall, market analysts were not convinced that the rally justifies buying the rand, especially as emerging market assets were under pressure today due to the drop of Chinese stocks and global tech shares.

USD/ZAR dropped as much as 2.82% to 13.7598 as of 13:23 GMT today.

If you have any questions, comments or opinions regarding the South African Rand, feel free to post them using the commentary form below.

Leave a Reply

required
required  

Navigation

Menu