Rand tum­bles as Zuma sur­vives vote

The Star Early Edition - - PRICES - Reuters

THE RAND slid fur­ther yes­ter­day af­ter weak­en­ing nearly 1.5 per­cent on Tues­day evening af­ter Pres­i­dent Ja­cob Zuma sur­vived a no-con­fi­dence vote in par­lia­ment by se­cret bal­lot with mar­kets re­act­ing al­most im­me­di­ately and send­ing the unit near a one-month low.

At 7.30pm on Tues­day, the rand had weak­ened 1.4 per­cent to R13.4050 to dol­lar, hav­ing traded as firm as R13.1525 in the ses­sion as some par­tic­i­pants bought op­tions in the cur­rency to bag prof­its should the mo­tion fail.

By 5pm yes­ter­day, the lo­cal unit was bid at R13.4742 to the green­back.

“The USD/ZAR im­me­di­ately jumped higher to close to R13.40 and we ex­pect it to keep grind­ing higher be­fore rand sta­bilises,” said head of emerg­ing mar­kets at TD Se­cu­ri­ties, Cris­tian Mag­gio, on Tues­day.

“While Zuma’s po­si­tion is be­com­ing in­creas­ingly pre­car­i­ous, which could be rand pos­i­tive go­ing for­ward, we think it may be too early to look at po­ten­tial rand ap­pre­ci­a­tion now,” Mag­gio said.

Zuma sur­vived a no-con­fi­dence mo­tion against him in par­lia­ment on Tues­day by win­ning 198 votes to the op­po­si­tion’s 177 votes as ANC law­mak­ers ral­lied to his sup­port.

“While the con­sen­sus had been that Zuma’s sur­vival of the no-con­fi­dence mo­tion would strengthen his hand ahead of the elec­tive con­fer­ence, the sub-200 num­ber of ‘no’ votes calls this into ques­tion”, said Stan­dard Charted Africa an­a­lyst, Razia Khan.

On Mon­day the rand gained as much as 1.5 per­cent to its firmest in a week af­ter the par­lia­men­tary speaker al­lowed a se­cret bal­lot in the op­po­si­tion-spon­sored no-con­fi­dence vote against Zuma.

In fixed in­come, bonds were largely un­moved.

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