South Africa's rand steadied in late trade on Thursday, after slipping to a new 11-month low in the session as concerns about the outlook for domestic growth and fears over a sovereign credit rating downgrade weighed on sentiment. At 1515 GMT, the rand traded flat at 15.0500 per dollar, after hitting 15.2000 earlier, its weakest level since September 2018.
Poor economic data, worries about financial troubles at state-owned power firm Eskom and negative commentary from credit rating agencies have all contributed to recent rand weakness, exacerbating broader concerns about emerging markets and trade tensions between the United States and China. President Cyril Ramaphosa, who has staked his reputation on reviving Africa's most developed economy, has struggled to do so. Data showed on Thursday that mining and manufacturing output contracted on a year-on-year basis in June.
The uncertain growth outlook has triggered fears of a rating downgrade by Moody's, the last of the three big international ratings agencies to have South African debt at investment grade. "I would say the November review by Moody's is more likely than not to result in a downgrade," said Nomura emerging markets economist Inan Demir, pointing to both the worsening trajectory of debt to GDP and the likely need to pump money into struggling state-owned firms such as Eskom.