Rand Drops as S&P Lowers South Africa’s Credit Rating

The South African rand dropped today as Standard & Poor’s lowered the nation’s sovereign credit rating due to slow economic growth and other problems that make South African assets less attractive to investors.
S&P cut South Africa’s long-term foreign currency sovereign credit rating to BBB- from BBB. The rating agency cited following reasons for such decision:

The downgrade reflects our expectation of lackluster GDP growth in South Africa, against a backdrop of relatively high current account deficits, rising general government debt, and the potential volatility and cost of external financing.

At the same time, the agency revised the outlook from negative to stable.
USD/ZAR was up from 10.6737 to 10.6767.

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