The rand is continuing to strengthen after some good economic news on Friday and is now testing the R15 to the dollar level. The rand is currently trading at around R15,08 to the dollar.
The local currency has continued to recover as a narrowing of the current account deficit helped ease some of the shock earlier this week of the economy plunging into recession.
However, economists say Moody’s could still downgrade South Africa’s credit outlook from stable to negative if the Ramaphosa administration fails to inject life into the economy.
Economists say ratings agency Moody’s would have to lower South Africa’s economic outlook before the country loses its investment grade.
Economist Jeff Schultz is confident that Moody’s will give President Cyril Ramaphosa’s administration up to 12 months to deal with growth and fiscal stability.
The ratings agency is the last of the “big three” international agencies to put South Africa’s long-term foreign-currency debt in investment grade.
Schultz says there has been a lot of improvement since the rating agency revised the outlook to stable in March.
“This expected improvement has not materialized. We slipped into a recession in the first-half of this year. And so, while we remain of the view that Moody’s will be willing to give Mr Ramaphosa’s administration up to 12 months, we think that the agency is likely to return the outlook to negative on the back of the disappointment in the first-half as well as the delays in policy and (the) big question on land and how it’s going to be implemented.”
