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New York — South Africa’s credit rating outlook was cut to negative by Moody’s Investors Service, which said the country faces a “prolonged” period of slow growth and increasing political pressures.

Moody’s lowered the outlook from stable and maintained the country’s credit grade at Baa2, the second-lowest investment grade, according to a statement. That’s one level above the rankings of Standard & Poor’s and Fitch Ratings.

South Africa’s “increasingly weak” growth outlook is likely to continue amid “persistent structural challenges”, Moody’s analysts Kristin Lindow and Yves Lemay said in the statement. The risk of “fiscal slippages in the face of both slower growth and increasing political pressures” is increasing, they said.

South Africa’s economy, the largest on the continent after Nigeria’s, is stagnating as electricity shortages, low global demand and falling metal prices stifled output. President Jacob Zuma shocked global investors after naming two finance ministers in four days over the past week and firing a long-term incumbent, raising concern about the credibility of his economic policies.

The rand has already tumbled 20 percent in 2015 against the dollar as raw material prices plunged, and the country faces the prospect of a US interest-rate increase this week that is expected to accelerate capital outflows from developing nations.

Fitch cut the country’s grade to BBB- on December 4. S&P cut it to the equivalent level in June 2014.

Meanwhile, the rand recovered below 15 against the dollar, extending the previous session’s rally after appointment of a widely respected finance minister, Pravin Gordhan.

By 10:32, the rand had inched up 0.73 percent to R14.97/$, a level last seen before Nhlanhla Nene was fired as finance minister last Wednesday.

Ratings agency Fitch said on Monday that the appointment of Gordhan – the third finance minister in a week – had not been enough to enhance confidence in the government’s management of an economy whose investment grade status is already at risk.

“Although the dust is still to settle fully, President Zuma’s climb down on the finance minister appointment is a welcome development, with positive implications, though much damage has been done to already depressed confidence,” said Barclays Africa currency strategist Mike Keenan.

Government bonds recovered in early trade, with the benchmark paper due in 2026 down 13.5 basis points at 9.865 percent. The Johannesburg broader All-share index opened 0.2 percent higher at 48 177 points.

The volatile Banking index rose 1.83 percent, having fallen by more than 15 percent last week after a sharp sell-off. Investors are also cautious ahead of a widely anticipated US interest rate increase by the Federal Reserve yesterday.

The rand has fallen more than 30 percent so far this year as investors dump risky assets in anticipation of a US interest rate hike amid a commodity rout.—Fin24.