The rand was relatively composed on Monday morning‚ suggesting that a credit rating downgrade by Moody’s on Friday had been largely priced.

As expected‚ Moody’s downgraded SA’s debt rating by one notch‚ meaning the country’s investment grade credit rating was still intact‚ at least for now.

However‚ THE Moody’s outlook was kept at negative‚ implying that the agency could still downgrade the rating to sub-investment grade‚ which would probably trigger bond outflows and cause the rand to weaken.

“At the end of the day‚ the risk of us falling out the World Government Bond index has been elevated a couple of notches and‚ we as a country‚ are literally clinging to the cliff edge by our finger‚” Standard Bank trader Warrick Butler said.

Moody’s downgrades SA’s foreign and local currency debt one notch to Baa3 and retains negative outlook

For now‚ bond inflows have bailed out of the rand‚ which in turn has helped to keep a lid on inflation‚ which has returned to within the Reserve Bank’s 3%-6% target range.

Investors would also keep a close watch on the US Federal Reserve‚ which is expected to lift the repurchase rate later this week by at least 25 basis points. Markets will monitor chairperson Janet Yellen’s forward guidance on rates.

At 8.51am‚ the rand was at R12.8719 to the dollar from R12.8986‚ at R14.4334 to the euro from R14.5049 and at R16.4035 to the pound from R16.4701.

The euro was at $1.1213 from $1.1201.