Zuma move bad for pockets

THERE is a lot of speculation about why President Jacob Zuma ordered Finance Minister Pravin Gordhan to cut short meetings with international investors and return home but, whatever the reason, it is going to hurt our pockets.

In the past few weeks, the rand had strengthened to levels last seen in July 2015, making it the world’s best performing currency.

A few days ago, it was trading at about 12.30 to the US dollar.

Shortly after Gordhan received his orders to return home, the rand slipped and is now hovering at about 13 to the US dollar.

If Gordhan and his deputy, Mcebisi Jonas, go as has been predicted, it is likely to weaken even further.

The first major impact for ordinary South Africans will be in the form of higher fuel costs, although not immediately.

Thankfully, for most of this month the rand was strong and oil prices weak. As a result, petrol prices are set to fall next month.

The fall in petrol prices is most unexpected, given that motorists were expecting to pay at least 39 cents more a litre due to an increase in fuel-related taxes – 30 cents a litre for the fuel levy and 9 cents a litre for the Road Accident Fund.

However, it may be the last decrease we see in a while because come May, Zuma’s recall of Gordhan will be felt at the pumps directly as a result of a weaker rand.

As the rand falls, it will push up food prices that were just starting to fall as the drought eased.

Furthermore, hopes of a dip in the interest rate later this year have now been dashed.

Zuma’s decision will not just affect our personal finances. The events of the past few days are also likely to result in the credit ratings companies downgrading our investment status, probably to junk.