Fitch has become the second major ratings agency this week to cut the South African government’s sovereign credit rating to junk status, after the ousting of respected finance minister Pravin Gordhan knocked confidence in President Jacob Zuma’s commitment to sound economic policies.

S&P downgraded the government’s foreign currency debt to junk status on Monday, but Fitch went one step further today by also cutting the country’s rand-denominated debt to BB+. The rand weakened a little in response. President Zuma and his supporters have attempted to reassure investors since the first downgrade, saying the Treasury’s “policy orientation remains the same”. However, Fitch was unconvinced, saying in a statement that it believes the reshuffle “is likely to result in a change in the direction of economic policy”. It added: The reshuffle partly reflected efforts by the out-going finance minister to improve the governance of state-owned enterprises. The reshuffle is likely to undermine, if not reverse, progress in SOE governance, raising the risk that SOE debt could migrate onto the government’s balance sheet.

Fitch was not scheduled to review South Africa’s rating until the summer, though the agency warned last week that Mr Zuma’s reshuffle could affect its rating.