* Rand and bonds under pressure on SP downgrade
* Domestic issues to continue weighing on local sentiment
JOHANNESBURG Oct 15 (Reuters) – South Africa’s rand
weakened against the dollar on Monday as market players digested
a Standard and Poor’s ratings downgrade that put local assets
under pressure.
The rand was 1.15 percent weaker against the dollar
at 8.8055 at 1400 GMT, from Friday’s New York close at 8.7280.
Standard Poor’s cut South Africa’s credit rating after
trading ended in Johannesburg on Friday, to BBB with a negative
outlook, saying strikes and social tensions could reduce fiscal
flexibility and hurt growth in the continent’s biggest economy.
The cut leaves South Africa two notches above a
‘speculative’ ranking and the cost of insuring the country’s
debt against default has risen by 7 basis points since Friday.
It has risen over 40 basis points since early August, according
to Markit.
“The rand continued to be driven by domestic event risks,”
said Tertia Jacobs of Investec Capital Markets.
South Africa has been hit by a wave of wildcat strikes since
August that have spread beyond the mining sector, threatened
industrial relations and sparked downgrades by two of the three
global ratings agencies.
SP added that it sees South African growth softening to
around 2.5 percent in 2012 and the budget deficit increasing to
at least 5.1 percent of output.
Continued…
