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Johannesburg - The rand weakened against the dollar early on Friday after Fitch rating agency changed the outlook for Africa's most advanced economy to negative from stable.
Fitch said it was concerned mainly about poor prospects for economic growth and rising public debt. The agency kept its rating at BBB.
The rand fell to a session low of R10.7230 to the dollar, while government bonds gave up 7 basis points to 8.435% on the benchmark 2026 issue and fell 6 basis points to 6.745% on the 2015 note.
The biggest risk to the economy's growth is the crippling five-month strike in the platinum sector, which saw gross domestic product contract in the first quarter of the year, although there are signs the strike could soon come to an end.
Standard & Poor's, Fitch and Moody's all last downgraded Pretoria in the aftermath of another wave of violent labour protests in 2012, which culminated in police shooting dead more than 30 striking miners.
S&P is due to give its rating review later on Friday and Barclays believes the company, which already has the economy on negative outlook, will downgrade the credit rating.
"If South Africa avoids a downgrade, we expect the rand to head back to 10.30/dollar. On the other hand, the rand could weaken towards the R11.00/$ depending on the severity of the downgrade."
Fitch said it was concerned mainly about poor prospects for economic growth and rising public debt. The agency kept its rating at BBB.
The rand fell to a session low of R10.7230 to the dollar, while government bonds gave up 7 basis points to 8.435% on the benchmark 2026 issue and fell 6 basis points to 6.745% on the 2015 note.
The biggest risk to the economy's growth is the crippling five-month strike in the platinum sector, which saw gross domestic product contract in the first quarter of the year, although there are signs the strike could soon come to an end.
Standard & Poor's, Fitch and Moody's all last downgraded Pretoria in the aftermath of another wave of violent labour protests in 2012, which culminated in police shooting dead more than 30 striking miners.
S&P is due to give its rating review later on Friday and Barclays believes the company, which already has the economy on negative outlook, will downgrade the credit rating.
"If South Africa avoids a downgrade, we expect the rand to head back to 10.30/dollar. On the other hand, the rand could weaken towards the R11.00/$ depending on the severity of the downgrade."
