The South African rand slipped in value on Tuesday as a consequence of a credit rating service slashing the rating of the second-largest economy in the euro zone, Bloomberg reports.
The monetary unit of Africa's largest economy ended three consecutive days of gains after Moody's Investors Service pulled down France's credit rating from AAA to AA1. The slash serves as a warning about worsening financial and economic circumstances in the euro region, which is a top trade partner with South Africa.
"We don't think the rand is out of the woods yet‚" analyst Mike Keenan with Absa Capital told Ventures Africa on Tuesday. "On the domestic front‚ we still have a poor macro-economic backdrop and the upcoming ANC national elective conference. Internationally‚ the looming U.S. fiscal cliff will weigh on the currency."
France, which trails only Germany for top economy in the euro zone, also has a negative outlook. This past January, Standard & Poor's downgraded France's credit rating.
Earlier this week the rand had been on the uptick after running into challenges last week while analysts and investors confronted risk-aversion challenges, according to Ventures Africa.
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