Rand back below R15 vs the dollar as ratings agency says no recession for SA

Ratings firm S&P Global Ratings believes South Africa will not enter into a recession soon, Reuters reported.

The rand dipped below R15 against the dollar for the first time in nearly a month, trading at R14.92, at 16:30pm.

On Friday the ratings agency affirmed the country’s credit rating at BBB- with the outlook remaining negative. However, it lowered its economic growth estimate to 0.6% from 1.6%.

“The key issue is around turning the economic growth story,” Gardner Rusike, S&P’s analyst for Africa, told a media conference call.

“The potential impact of increasing political tensions within the ruling ANC and within government can potentially derail policy implementation and the reform endeavours that have been intensified since the beginning of this year.”

Reuters reported that Fitch is also likely to affirm the country’s investment grade credit rating this week, but warned that it may lower its outlook to negative, citing analysts.

Fitch currently rates South Africa one step above speculative grade with a stable outlook.

The agency has not said when it will publish its review, however Treasury has said it expects the review on June 8.

“We expect Fitch to affirm the rating at BBB- but change the outlook to negative, bringing them in line with S&P,” Rand Merchant Bank analyst John Cairns said.

“The announcement will be a small negative and will not fully offset the positive news from S&P.”

Three other analysts Reuters spoke to expected much the same result, the media firm said.

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Rand back below R15 vs the dollar as ratings agency says no recession for SA