South African currency plummets after Moody's downgrade

GMT 00:53 2014 Saturday ,08 November

Arab Today, arab today South African currency plummets after Moody's downgrade

Johannesburg - XINHUA

The South African rand on Friday slipped to a session low of 11.275 rand per U.S. dollar, its weakest since October 6 following Moody's downgrade of the country's credit ratings.
By 8:27 a.m. Friday, the rand traded at 11.2635 rand per U.S. dollar, 0.04 percent off its New York close of 11.259 rand.
Market analysts described the rand's depreciation as the direct result of the downgrade.
On Thursday, Moody's Investors Service (Moody's) downgraded South Africa's investment grade credit ratings to "Baa 2 / P-2" from "Baa1 / P-2".
Moody's revised the country's credit outlook to stable from negative.
Moody's decision keeps South Africa's rating in investment grade.
Moody's said its decision to change the outlook to stable reflects South African policymakers' commitment to reining in government debt growth over the medium term and the broad political support for a macroeconomic strategy, including the National Development Plan, tighter monetary policy and fiscal restraint, which should help stabilise the debt burden over the medium term.
The South African National Treasury said the government noted Moody's decision and recognised that economic growth had slowed down and there was a need to implement growth-inducing initiatives.
"The medium-term strategic framework prioritises initiatives that will boost investment, including major projects in rail, energy and ports," the Treasury said.
"Government will continue to make the tough decisions that are necessary to address our challenges. Furthermore, focus in the medium term will be on accelerating the structural changes that are already under way and whose impact will support economic growth," the Treasury said in a statement.
The statement said the government was committed to narrowing the budget deficit, stabilising debt and rebuilding the fiscal space that enabled South Africa to escape the worst effects of the global economic crisis.
"Government will continue to make the tough decisions that are necessary to address our challenges so we can build on the gains we have made over the past 20 years to improve the lives of our people."

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