#RandReport: Rand firms on disappointing US jobs data
The rand swung firmer in late trade, clawing back some ground ahead of a review of its debt by S&P Global Ratings.
Africa's most industrialised country's risks being downgraded to "junk" status - for the first time since 2000 - at a time when it needs to borrow about R165 billion this fiscal year to help plug its budget deficit.
The Treasury warned last month that its borrowing costs could double or triple if it falls into sub-investment grade, which would also deter investment in a country it forecasts to register 0.5 percent growth this year.
Standard & Poor's rates South Africa BBB-, the lowest investment grade level, with a negative outlook. Fitch and Moody's last week held the country's investment grade rating.
At 15:15 GMT the rand was 1.24% firmer at 13.9200 per dollar.
Some analysts said they were cautious after Standard & Poor's last week cut South Africa's state-owned power utility Eskom's credit rating a further notch into sub investment, raising concerns over the country's sovereign rating.
Others said S&P could downgrade South Africa's local debt rating but keep the foreign rating at investment grade.
"S&P's decision is mostly black or white: they downgrade South Africa's long-term foreign currency rating or not. However, there are some grey scenarios; for instance, where they downgrade the local rating but not the foreign rating," Rand Merchant Bank analyst John Cairns said.
He forecast a brief "aggressive" rand reaction in the case of a downgrade, with the currency falling to 14.4000 per dollar.
Although Fitch kept its rating for South Africa last week, the agency changed its outlook to negative from stable, warning that political risks could hurt growth and cited in-fighting in the ruling African National Congress (ANC).
The ANC this week backed scandal-plagued President Jacob Zuma after several officials called for him to resign. Since taking office in 2009, Zuma, 74, has been plagued by accusations of corruption, which he has repeatedly denied.
Stocks were also hit by worries over the rating, with losses seen across the board amid cautious investing.
The benchmark Top-40 index was down 1.36% to 42,822 points with petrochemical company Sasol leading the losers, falling 4.3% to 360 rand. The broader All-Share index fell 1.34% to 49,256 points.