Rand tumbles as Zuma survives vote

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.