“This means that the cost of borrowing debt by the government will now be higher,” said Gordhan.
The removal of Gordhan comes after South Africa narrowly escaped a downgrade to junk status, with rating agencies Fitch and Standard & Poor’s placing the country’s sovereign rating one notch above junk. Moody’s placed SA two notches above junk.
Gordhan said the work to allay the jitters of rating agencies has “not being undone.”
“Any undoing of confidence would hurt ordinary South Africans. All of us should work to get ratings to remain in investment grade. We need to convince rating agencies that we are in the right direction.”
The rand continued to extend its losses, breaching the R13 level to the US dollar at 21:10 on Thursday. The local unit plummeted to R13.38 against the US dollar at 12:25 on Friday from an intra-day low of R12.80 at 17:40 on Thursday.
SA ten-year government bonds yields jumped from 8.28% on Monday, to a high of 8.94% after the recall of Gordhan from an investment roadshow. But bonds, which are about 30% held by foreign investors, have since retreated to 8.88 at 12:10%.