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The ratings agency Moody’s has downgraded South Africa’s sovereign debt rating.

The move comes after similar downgrades from Fitch and Standard and Poor’s.

The South African economy has been struggling of late, amid industrial action on the platinum mines earlier this year and recent electricity blackouts.

South Africa’s economy narrowly avoided recession in the first half of the year.

Moody’s downgraded South Africa one notch to Baa2, just two notches above “junk status”.

While South Africa retains an investment grade, Moody’s said its decision was based on “poor medium-term growth prospects due to structural weaknesses, including ongoing energy shortages as well as rising interest rates”.

Electricity blackouts
Earlier this week, the state-run electricity generator, Eskom, announced the possibility of rolling blackouts, after a coal silo collapsed at a power station in the east of the country.

Last month, South Africa’s finance minister, Nhlanhla Nene, slashed this year’s growth forecast for the economy to 1.4%, down from a previously forecast figure of 2.7%.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza