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JOHANNESBURG, June 3 (Xinhua) -- The decision by Standard & Poor (S&P) Global Rating to keep South Africa's rating unchanged would help boost investors' confidence in the country, economists said on Friday.
S&P's decision "was largely the agreed market view, buttressed during the week by Finance Minister Pravin Gordhan's comments stating that he believed the country had done enough to stave off a downgrade, Craig Sherman of Ashburton Investments, told Xinhua.
Earlier on Friday, S&P affirmed South Africa's rating and keeps its outlook negative.
Several economists interviewed by Xinhua were upbeat about the SA's economy after S&P's announcement. Treasury One chief currency dealer Wichard Cilliers said he expected the rand to appreciate now that SA has dodged the bullet of a downgrade.
"(This) positive outcome is a confidence booster to the economy," he said.
"We could see the rand back at 15.30/U.S. dollar or even better," Cilliers added.
After the announcement the rand appreciated 2.6 percent to R15.15 against the dollar and 1.85 percent to R22 against the pound.
"It is a great relief more than good news. But we've to be more worried as the economy is not performing to expectation. The government has to work hard to avoid the December downgrade,"Cilliers said.
He said the rand's performance will be further noticed on Monday when companies get involved.
However, Christie Viljoen, an economist at KPMG said, the decision by S&P was expected. He cautioned, "It's only a matter of time before they would downgrade us to junk status".
The SA National Treasury said the government welcomed the decision by S&P.
"The benefit of this decision is that SA is given more time to demonstrate further concrete implementation of reforms that are underway aimed at achieving higher levels of inclusive growth and place public finances on a sustainable path," the Treasury said.
Meanwhile, speaking on Talk Radio 702, SA Finance Minister Pravin Gordhan said he expects the economy to grow so as avoid a downgrade in December since the country is resilient.
If SA's credit rating was downgraded, it would mean high borrowing costs for the government and it would be even harder to stop a budget deficit estimated at 3.2 percent of the GDP in the 2016/17 financial year. Enditem
