Rand plunges to fresh levels as Gordhan fears pick up

THE rand headed for the biggest weekly drop since May while benchmark government debt slumped by the most this year on concerns that Finance Minister Pravin Gordhan’s job is on the line amid speculation of a rift between him and President Jacob Zuma.

Statements of support for the finance minister from Zuma and Deputy President Cyril Ramaphosa on Thursday failed to ease anxiety‚ with a survey of investors and other market participants by Rand Merchant Bank showing about half believe he will be removed.

The currency pared losses on Friday after Federal Reserve Chair Janet Yellen said US rate increases would be gradual.

The currency strengthened 1.1% 14.05/$ by 5pm on Friday‚ paring the week’s decline to 3.9%‚ the most since the five days ending May 6 and the biggest drop among more than 150 global currencies.

Opposition parties and some independent analysts have accused Zuma of trying to gain greater control of the Treasury to further his economic interests before his second and final presidential term ends in 2019. He has denied the allegation.

Gordhan was summoned to report to the Hawks police unit on Thursday. He refused to go‚ saying he had done nothing wrong. Zuma said while he had “full confidence” in Gordhan‚ he could not stop the investigation into alleged irregularities at the South African Revenue Service‚ which Gordhan led from 1999 to 2009.

Benchmark government rand-denominated bonds due December 2026 gained for the first time in three days‚ with the yield down 10 basis points to 8.97%. The yield has soared 50 basis points this week‚ the most since December‚ when Zuma fired then-finance minister Nhlanhla Nene and replaced him with little-known lawmaker Des van Rooyen. He reappointed Gordhan five days later as markets took a nosedive. — Bloomberg