The SA rand got firmer against the US dollar on Friday ahead of the anticipated Moody’s review
At 0655 GMT, the rand went up 0.28 percent at 14.1000 against the dollar, but was well within recent ranges as the market awaited Moody’s credit review later in the day.
The currency is also expected to react later on Friday to Moody’s review of South Africa’s BAA2 credit rating with a negative outlook, although this is expected to come after local markets are closed, Reuters reported.
Rand boosted by hawkish central bank policy statement on Thursday, which left door open for interest rate hikes next year even while holding the benchmark repo at 7 percent for now.
Stock futures index edges up 0.29 percent, pointing to a largely flat start for Johannesburg bourse while Government bonds retreat in early trade, yield for 10-year debt rises 4 basis points to 9.075 percent compared with Thursday’s close.
Ratings agency Moody’s is expected to announce whether it will downgrade the country or whether it’s been convinced that South Africa is on track towards better economic growth.
The SA economy has been marred by stagnant growth exacerbated by growing unemployment, an increasing public service wage bill and harsh political conditions, among others issues.
Meanwhile, President Jacob Zuma has downplayed the highly politicised rating agencies, it’s not a big deal compared to much bigger issues the country is facing.
Zuma said that the government has worked very hard to grow the economy under very difficult conditions of ‘global meltdown’. Hence, there would be no need to worry much on the rating agencies decision on the economy.
He cited countries like France, Russia, Turkey, the UK, Brazil, China and the US who have been downgraded over the past five years and yet, they never made noise about it.
“You have never heard, but in South Africa, even if they have not arrived, its a big issue. We are politicising downgrading – that is our problem,” Zuma said
“The point I am making,” Zuma said, “is that we here tend to politicise things and therefore create a very big hype when this is not an issue to other people.”
He said to the house that many would probably be hearing for the first time that other countries are in junk status. “It was not a big issue,” he said.