fbpx

South Africa Has Done Enough to Avoid S&P’s Downgrade – Gordhan

South Africa Has Done Enough to Avoid S&P’s Downgrade – Gordhan

South Africa has done everything possible to avoid a credit rating downgraded by Standards & Poor’s expected to be announced later on Friday, Finance Minister Pravin Gordhan told Bloomberg.

The rating agency is on the cusp of downgrading Africa’s most industrialized economy to junk status, 17 years after it raised the third largest economy on the continent from sub-investment.

According to analysts, its quite unlikely that S&P’s will cut the rating, but a change will be most likely in the offing in December when the next review is done if the situation doesn’t change for the better.

Twelve out of 13 analysts in a Bloomberg survey in April expected the ranking to be lowered to sub-investment grade by the end of the year, while four forecast the cut to happen by mid year.

The South African rand strengthened about 2.2 percent earlier on Friday on the back of weaker than expected U.S. job data.

It is expected that the local currency could gain past the 15 rand per dollar mark if S&P’s does not downgrade the country’s debt, Bloomberg reported.

The rand, which has fallen 26 percent this year, may also have priced in a downgrade and may not depreciate much in case the rating is lowered.