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.
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.
