JOHANNESBURG: South Africa's rand raced to a one-month high against the dollar on Monday as investors cheered ratings agency Moody's decision to affirm the country's investment-grade credit rating and revise its credit outlook to stable from negative.
At 0632 GMT, the rand traded at 11.6275 per dollar, 1.04 percent firmer than its New York close on Friday and its firmest level since Feb. 27, Thomson Reuters data showed.
Moody's late on Friday affirmed South Africa's debt at 'Baa3', the lowest rung of investment grade, saying the previous weakening of national institutions was gradually reversing which supported an economic recovery.
"This will ultimately provide the markets with a degree of comfort, and this scenario is likely to influence the decision making at the Monetary Policy Committee later in the week," Nedbank analysts wrote in a note.
The South African Reserve Bank is due to announce its interest rate decision on Wednesday.
A downgrade to a "junk" rating by Moody's would have seen South Africa removed from Citi's World Government Bond Index (WGBI) and could have triggered up to 100 billion rand ($8.58 billion) in asset sales by foreign investors.
Moody's is the only major ratings agency that rates South African debt as investment grade after S&P Global Ratings and Fitch downgraded the sovereign to "junk" status last year following a deterioration in the country's economic outlook.
South African has seen a return of sorely needed investor confidence since President Cyril Ramaphosa replaced scandal-plagued Jacob Zuma, who resigned in mid-February on the orders of the ruling African National Congress party.
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