Junk reprieve strengthens rand after GDP news hurts currency
8 June 2016
Cape Town – The quick succession of news that South Africa’s economy shrunk by 1.2% in the first quarter of 2016 followed by news that ratings agency Fitch had spared the country from junk status sent the rand on a quick roller-coaster ride.
“The GDP number was worse than expected with the usual suspects of mining and agriculture being the hardest hit,” explained currency expert Adam Phillips of Umkhulu Consulting. “I think we all felt the first quarter would be hard, but the figures are very poor.”
“Within minutes, Fitch kept our rating and stayed with stable rather than go to negative,” Phillips told Fin24.
“There was a move up to R14.99/$ on the GDP number, but the Fitch news has allowed it to come back to 14.85,” he said at 12:50 on Wednesday.