Ratings downgrade would impact markets - Nene | Fin24
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Ratings downgrade would impact markets - Nene

Dec 02 2015 17:19

Pretoria - Finance minister Nhlanhla Nene said on Wednesday that a potential credit ratings downgrade would impact markets in the SA economy.

The rand remained on fragile ground against the dollar as investors fretted about a possible credit rating downgrade.

"We are always on the lookout for such. We are always on alert. If it does happen, it will have an impact on markets," Finance Minister Nhlanhla Nene told Reuters before the South Africa-China bilateral talks in Pretoria.

By 16:45 the rand, which hit an all-time low of 14.4950 versus the greenback in the previous session, was trading 0.3% higher at R14.3925/$.

Traders said investors were focused on Friday's reviews from Fitch, which rates South Africa at BBB with a negative outlook and warned of a possible downgrade in September, and from Standard & Poor's, which has it at BBB- with a stable outlook.

"The currency situation is doing what it is supposed to do," Nene said. "Our floating exchange rate serves as a shock absorber when it comes to external shocks and we have seen that happening. It supports our manufacturing and export industries."

Nene backed a decision by the central bank, which raised interest rates to 6.25% last month, citing that the priority for monetary policy was to keep inflation within a 3-6% target range.

Headline consumer inflation ticked up to 4.7% year-on-year in October compared with 4.6% in September.

"It is meant to send a signal to try and deal with inflation expectations. I think it was timely," Nene said.

nhlanhla nene  |  sa economy


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