Rand slumps in wake of political strife

THE rand weakened yesterday, with a combination of mixed trade data and a looming interest rate hike in the US, keeping traders cautious.

Stocks were lower on the day, with Barclays Africa unit falling after the company said it had approval to sell off its stake in the locally listed entity.

The rand weakened 0.4 percent to R13.18 to the dollar, sliding back from a brief run to a session-best R13.06 as a third consecutive trade surplus, albeit smaller than expected, failed to lift the cloud of political uncertainty.

“The short-term outlook for the rand remains unfavourable as long as political noise continues to dominate headlines and drive pessimism,” said economist at ETM Analytics, Halen Bothma.

The unit retreated from last week’s two-month high after President Jacob Zuma, over the weekend, survived a second attempt in six months by members in the national executive committee of the ANC who tried to unseat him as leader.

The local currency has been on the back foot since.

Zuma has faced an internal backlash as well as outcry from opposition parties and civil society after his decision to fire Pravin Gordhan as finance minister in late March triggered downgrades to junk by two of the big three ratings agencies.

Fitch and S&P Global Ratings, who both cut South Africa’s sovereign rating from BBB- to BB+ in early April, are expected to make follow-up rating decisions this week, while Moody’s is due to announce a credit review in the next two weeks.