Fitch just revised South Africa’s outlook to negative — and the rand is sliding

Fitch just revised South Africa’s outlook to negative from stable.

The ratings agency also affirmed the country’s long-term foreign and local currency issuer default ratings at BBB-.

In the accompanying statement, Fitch noted that the negative revision reflects various factors, including political in-fighting and depressed business confidence despite some economic recovery.

“Political risks to standards of governance and policy-making have increased and will remain high at least until the electoral conference of the African National Congress (ANC) in December 2017, negatively affecting macroeconomic performance,” the agency wrote.

“The in-fighting within the ANC and the government is likely to continue over the next year. In Fitch’s view, this will distract policymakers and lead to mixed messages that will continue to undermine the investment climate, thereby constraining GDP growth,” it added.

On Friday Reuters reported that South Africa’s president, Jacob Zuma, will be questioned by the African National Congress’ (ANC) integrity commission next week in light of continued allegations of corruption.

Senior members of the ANC have called for Zuma to resign over the past few months, and his appearance before the panel could further exacerbate divides within the party.

The rand is down by 0.3% to 14.1824 per dollar as of 10:09 a.m. ET.

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