Rand now in a state of flux

THE rand was weaker against the dollar in midday trade yesterday, but was off intraday weakest levels as the fallout from the shock overnight axing of Finance Minister Pravin Gordhan continued to reverberate through markets.

The rand trended firmer on a news conference held by the Gordhan at the Treasury in Pretoria‚ in which he slammed the charges levelled against him in a rogue intelligence report as “absolute nonsense”.

The intelligence report had been given as the reason Gordhan was recalled by President Jacob Zuma from the overseas investor roadshow on Monday‚ and his replacement by Malusi Gigaba on Thursday.

At 11.48am the rand was at R13.37/$ from R13.26. It reached an intraday weakest level of R13.62/$ after Gigaba’s appointment.

The rand was at R14.28/ R14.15, and at R16.65/£ from R16.53.

“Technical trading for the [rand] would largely hinge upon the reaction within SA and in particular‚ the reaction from senior ministers with regard to the contentious cabinet reshuffle‚” Momentum SP Reid analysts said. In a fall reminiscent of that witnessed after Zuma’s replacement of then-finance minister Nhlanhla Nene with Des van Rooyen in December 2015‚ the rand plummeted overnight‚ losing almost 3% more against the dollar‚ pound and euro in opening trade.

The rand was expected to remain vulnerable in the short-term as ratings agencies’ reviews were announced over the next few months. “As it stands‚ there was a strong probability we will get downgraded by all three ratings agencies‚” said TreasuryOne analyst John Moni — TMG