South Africa's rand and bonds retreated early on Wednesday as sentiment was rocked by Moody's decision late last night to place the country's credit rating on review for a downgrade over its worsening growth prospects.
Stocks opened slightly firmer, with the JSE Top-40 blue-chip index inching up 0.12 percent.
At 0700 GMT the rand had weakened 0.2 percent to 15.4650 per dollar, gaining back some ground after slipping to 15.4700 overnight.
Government bonds weakened as well, with the benchmark issue due in 2026 adding 3 basis points to 9.315 percent.
"Comments from Moody's overnight have spiked the risk-off trade with bonds and currencies taking a beating overnight," analysts at Nedbank Capital said in a note.
The rand, already on the back foot after Tuesday data showed the current account deficit widened sharply, saw a modest selloff after Moody's said it was concerned about the ability of government policies to restore fiscal strength and boost growth.
Moody's cited weak economic performance in Africa's most indistrialised economy as a risk factor when assigning a negative outlook to the rating in December 2015, and said it now expected the economy to grow at only 0.5 percent in 2016, slower than Treasury's forecast of 0.9 percent.
Moody's visits South Africa next week to assess the economy and decide whether to alter its Baa2 rating.
Finance Minister Pravin Gordhan told local Radio 702 on Wednesday that South Africa had a good to story to tell Moody's.
"Clearly we need to prove to ourselves and to them that we are capable of working together to grow our economy, create jobs and make our fiscal framework a viable one," Gordhan said.