Rand slumps nearly 3% to R13.74/$ on downgrade

The rand weakened substantially late on Monday after rating agency S&P Global cut SA’s credit rating to sub-investment‚ or junk status‚ at BB+ from BBB-.

The negative outlook remains in place‚ with S&P saying political risk was set to continue to be elevated this year.

S&P’s announcement came after the JSE’s close. It previously indicated it would announce its rating decision in June.

The rand reached R13.74/$ on the news‚ 2.85% lower on the day.

Earlier in the day the rand came back in intraday trade after losing 2% against the dollar in the morning in moves analysts expect will become the pattern over the next few months.

Volatility is likely to become commonplace in markets rather than sustained weakness‚ after President Jacob Zuma fired Finance Minister Pravin Gordhan last week and replace him with Malusi Gigaba‚ analysts say.

- TMG Digial/BusinessLIVE