JOHANNESBURG (Reuters) - South Africa’s rand was slightly weaker early on Friday, before important reviews of the country’s credit ratings expected later in the day.
At 0642 GMT, the rand traded at 13.9300 versus the dollar, 0.3 percent weaker than its New York close on Thursday.
S&P Global and Moody’s are scheduled to review South Africa’s ratings on Friday.
All eyes are on whether the two agencies downgrade the country’s local-currency debt to “junk” status. If both agencies downgrade South Africa one notch to junk, that could trigger up to $12 billion of forced selling of South African bonds, in turn pressuring the rand.
Fitch kept South Africa’s local and foreign currency credit ratings unchanged at BB+, one notch below investment grade, on Thursday.
Ratings agencies have cited policy uncertainty and a deteriorating fiscal position among concerns for the health of South African public finances.
Bond yields and default insurance costs suggest South Africa’s deeper descent into junk-credit territory and ejection from major global debt indexes seem to be accepted as a done deal.
Government bonds were a touch weaker early on Friday, with the yield on the benchmark instrument due in 2026 1 basis point higher at 9.355 percent.
Reporting by Alexander Winning; Editing by Biju Dwarakanath