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South Africa’s Rand Doesn’t Pose Credit Risk, Moody’s Says  

January 13, 2014
Mike Cohen, Bloomberg

A slump in the value of South Africa’s rand is unlikely to negatively affect the nation’s credit rating, Moody’s Investors Service said.

The rand weakened to a five-year low of 10.8353 versus the dollar yesterday on speculation that the Federal Reserve will end debt purchases this year. The currency has dropped 2.8 percent this year, extending its 19 percent slump in 2013.

“The South African exchange rate doesn’t pose a significant credit risk for the sovereign because the government intentionally has a relatively small exposure to foreign-currency denominated debt,” Kristin Lindow, a senior vice president at the ratings company, said in an e-mailed response to questions. “Likewise, the Reserve Bank’s determination not to intervene to try to affect the level of the rand exchange rate means that the volatility is not a risk for the foreign reserves, which is credit positive.”

Read more: Bloomberg

 
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