Cape Town – The rand was edging down to R14 to the dollar on Tuesday after one rating agency demoted South Africa to junk status and another placed it on downgrade review on Monday evening.
The rand, which has lost 11% of its strength in the last seven days, was rattled by the downgrade by Standard & Poors as well as the move by Moody’s to place South Africa – which it has two notches above junk - on downgrade review. It lost over 1.5% in the last 12 hours, during which time these actions were taken. By 08:07, it was trading at R13.93 to the greenback.
Umkhulu Consulting analyst Adam Phillips said that the turmoil experienced before the rating agencies’ decision was because “we are starting to see the rand behave like a below investment grade rated currency".