JOHANNESBURG – The rand plunged to an all-time low on Monday, falling below R18.00 to a dollar after ratings firm Moody’s cut the country’s last investment grade credit rating to “junk”, adding to mounting panic about the coronavirus outbreak.
At 0913 GMT, the rand was 0.97% weaker at R17.8300 per dollar, pulling back from the all-time low of R18.0800 it crashed to in Asian trading.
Late on Friday, Moody’s downgraded the rating one notch to Ba1 from Baa3 and maintained a negative outlook. S&P Global and Fitch downgraded Africa’s most industrialised economy to sub-investment grade in 2017.
Moody’s downgrade will see South Africa kicked out of the benchmark World Government Bond Index (WGBI) of local-currency debt at the end of April, triggering up to $12 billion of forced selling, treasury and analysts estimate.
“There is still some uncertainty around how much forced-selling of domestic bonds will materialise as a result of expulsion from the WGBI,” economists at ETM Analytics said, adding: “It is unlikely that all investors will head for the door at the same time.”
Source : Reuters