‼️As of Friday morning, April 3, there were more than 7,000 confirmed coronavirus cases in Africa. The governments across the continent are taking decisive action to tackle the pandemic.
〽However, even if Africa somehow avoids the worst human casualties, it is almost impossible to avoid a serious economic shock. African countries are fully integrated into the world economy, being exporters of goods whose prices are falling rapidly. Currencies of those countries that import goods are losing value against the US dollar. Some countries face both of these problems, moreover, international investors are going away from Africa.
🇿🇦South Africa has suffered the most, with 1462
COVID-19 cases reported to date. The number of foreign investors in government debt has declined sharply in recent weeks as investors withdraw money from emerging markets at a record pace. Yields on 10-year South African bonds
reached 12.35%, the highest level in more than 10 years, last week before the country's central bank announced it would start buying government debt
in secondary markets to support the market.
⬇The situation was further aggravated by Moody's decision
to downgrade South Africa’s sovereign credit rating to “junk” status from "Baa3" to "Ba1" and maintain a negative outlook. It means another downgrade could follow if the economy worsens or public debt grows faster than expected.
The South African rand reached a record low against the US dollar.
❌South African bonds are expected to be removed from the indices used around the world to track investment-grade debt, which will increase pressure on the currency, as some investors will be forced to sell their assets.