Ratings agencies have since cautioned that institutional weakening would contribute to further sovereign credit rating downgrades. Heightened political and institutional uncertainty arising from the March cabinet reshuffle were highlighted key reasons for the credit rating downgrades in April (S&P and Fitch) and in June (Moody’s). 


Credit rating downgrades on SA’s local currency debt by all the agencies to non-investment grade would trigger key government bond indices exclusion (for example the Citibank World Government Bond Index), resulting in portfolio outflows and likely an episode of sustained rand weakness.

At the time of publication, the rand steadied at 12.95/USD, aided by a slightly weaker USD and market relief over the SA constitutional court ruling that the vote of no confidence against the President may be held in a secret ballot.

The rand is expected to trade in a range of R13.45/USD – R12.45/USD, R15.00/EUR - R14.00/EUR and R17.00/GBP - R16.00/GBP.