JOHANNESBURG: South Africa's rand briefly touched a three-month low against the dollar on Friday after ratings agency Fitch cut its outlook for the country, while a Standard and Poor's ratings cut also weighed on the currency.
The rand fell 1.3 percent to a low of 10.8100 to the dollar, its weakest since late March, after Fitch affirmed its BBB credit rating but cut the outlook to negative from stable citing South Africa's poor economic outlook and rising public debt.
It also retreated slightly after S&P cut its own rating to BBB- from BBB, citing concerns about the impact of a prolonged platinum strike, coupled with weak domestic and external demand.
By 1754 GMT, however, the currency had recovered to 10.6830, down just 0.11 percent from its previous close.
Government bonds took the ratings announcements largely in their stride, with the yield on the benchmark 2026 issue ending only 5 basis points higher at 8.415 percent while the instrument maturing in 2015 added just 1.5 basis points to 6.7 percent.
"Market reaction is blunted by the fact that a risk of a downgrade had largely been priced in. Moreover, some had even spoken of the likelihood of a two-notch downgrade from S&P," Standard Chartered analyst Razia Khan said.
Markets were also cheered by signs that a wage deal between mine union AMCU and South Africa's top three platinum producers was imminent, signalling a possible end to the crippling five-month strike that has disrupted global output of the metal.
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