Rand slumps in wake of po­lit­i­cal strife

The Star Early Edition - - PRICES - Reuters

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.

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