Day of drama sends rand up and down

The New Age (Free State) - - INSIDE - BERNARD SATHEKGE

THE rand opened at R11.92/$, and by around 11am gained 0.66% to trade at R11.85/$ on the back of the ex­pec­ta­tion that Pres­i­dent Ja­cob Zuma was to va­cate his of­fice, but that didn’t take place.

How­ever, as it be­came more likely through the day that Zuma would be forced out of of­fice by to­day, the unit strength­eneto 2.5-year highs. By lunchtime, the cur­rency was 1% stronger, touch­ing R11.81/% but after a two hour­long speech by Zuma de­liv­ered in a tone of a per­son not will­ing to re­sign, the cur­rency started back-ped­dling to­wards the R12/$ – los­ing some gains to clock in at R11.91/$ at around 4pm.

“The rand has not been in­spired by the for­mal re­call of Zuma. This high­lights how much has al­ready been priced in – surely now every­one ex­pects the pres­i­dent to be out of of­fice soon. John Cairns, RMB’s mar­ket strategist said.

“Nev­er­the­less, after wait­ing for so long for such a ma­jor event, we still think that a for­mal res­ig­na­tion or re­moval will trig­ger some sharp gains, even if only tem­po­rar­ily,” he said.

Econ­o­mist Azar Jam­mine said the rand’s strength re­mains vul­ner­a­ble to chal­lenges that Deputy Pres­i­dent Cyril Ramaphosa faces and pos­si­ble fur­ther may­hem on global fi­nan­cial mar­kets.

“If Zuma does not leave of­fice im­me­di­ately, the cur­rency need not weaken be­cause of overseas per­cep­tions that a Ramaphosa lead­er­ship will en­sure a fight-back against cor­rup­tion.

“More im­por­tantly, the new lead­er­ship is likely to en­counter chal­lenges in bring­ing about the struc­tural changes needed to im­prove South Africa’s eco­nomic growth, in­clud­ing im­proved in­dus­trial re­la­tions, a vastly en­hanced set of ed­u­ca­tional out­comes and ef­fec­tive man­ag­ing of SOEs,” Jam­mine said.

• At 6pm yes­ter­day the rand was at a 2.5-year high of R11.78/$.

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