South Africa's rand hit a six-year low against the dollar on Friday and bond prices slid on concern that ratings agency Fitch could downgrade the country's debt in its latest review. The rand slumped nearly 1 percent to 11.7225 to the dollar as of 1528 GMT, its weakest since October 2008. It recovered to 11.6800 by 1600 GMT in volatile trade but was still down from Thursday's New York close of 11.6335.
Fitch is due to give the result of its review on Friday, as will Standard & Poor's, which like Moody's has already cut the country's rating this year. "The threat of a Fitch downgrade and likely very downbeat outlooks from both presents the risk of generating even more rand-selling interest," Tradition Analytics said in a note.
The rand has lost nearly 3 percent against the dollar in the past week, its biggest weekly drop since early September, as investors worry that a renewed power crunch and recent weak economic data could trigger a credit downgrade from Fitch. The local currency was also hurt on Friday by broad-based strength in the dollar after stronger-than-expected US consumer sentiment data. Government bonds had a bruising session, with the yield on the 2026 benchmark climbing to a month-high of 8.02 percent and closing at 7.975 percent, up 5.5 basis points from Thursday.
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