South African rand extends gains as rating agencies maintain outlook

The South African rand extended gains on Monday, passing the 18-month best reached on Friday as the currency drew strength from rating agencies holding the country's credit rating and outlook at current levels.

South African bank notes featuring an image of former South African President Nelson Mandela are displayed at an office in Johannesburg, file.Reuters/Siphiwe Sibeko

At 0650 GMT the rand was trading at 13.9350, up 0.3% against the dollar. It had raced past its December 2019 level to 13.9400 on Friday evening after the central bank said it could raise interest rates if consumer prices keeps rising.

S&P Global Ratings late on Friday affirmed South Africa's long-term foreign currency rating at BB-, three notches below investment grade, and kept local currency debt at BB. It predicted a stable outlook for both.

Fitch also affirmed South Africa's long-term foreign currency issuer default rating at 'BB-' on Friday and maintained a negative outlook.

The agencies cited South Africa's improving public finances, primarily because higher commodity prices helped to lift tax revenue last year.

Analysts have said that rising commodity prices could also help to boost government revenue for the 2021-22 financial year.