In the early part of this week the rand continued to factor in likely credit rating downgrades on the back of the recent Medium Term Budget Policy Statement (MTBPS), with Moody’s publishing a credit negative statement, which we believe signals it will downgrade SA’s long-term foreign currency sovereign debt to Ba1 (currently Baa3) at its next country review, on 24th November 2017. On the local currency credit rating front (also currently Baa3 with a negative outlook), Moody’s could wait until after the February 2018 Budget before downgrading. S&P has not released an official communication post MTBPS, but it is also likely to downgrade its local currency long-term sovereign rating for SA of BBB-, with a negative outlook, potentially also on 24th November.

The rand gained towards the end of this week (ending 3rd November) on news that the nominated successor to Janet Yellen, Chair of the Federal Reserve Bank, is Jerome Powel, who is seen as dovish.