Rand tumbles against US dollar
PRETORIA. — The rand slid against the dollar yesterday morning, extending its sharp overnight losses after the Treasury confirmed the receipt of a letter from the Hawks, asking Finance Minister Pravin Gordhan to present himself to the Hawks today.
The rand tumbled more than 3 percent against the greenback and weakened substantially against both the euro and the pound, marking a sharp reversal from the strengthening trend that had been in place since at least the Brexit vote in June.
Renewed rand weakness could put pressure on the Reserve Bank’s monetary policy committee, which meets in September to decide on interest rates.
A weaker rand stokes inflation, which may lead the Bank to increase rates even though it has forecast that the local economy will stagnate in 2016. Consumer inflation, which the Bank uses to decide on rates, has been outside the target band since at least December.
"The threat that Gordhan will no longer be able, or perhaps willing, to continue in his position is now real," Rand Merchant Bank currency analyst John Cairns said.
"His position would presumably be untenable if he is actually arrested — or at least an arrest would provide a justification for his removal."
The rand was at R14,0988 against the dollar from R14,0007 at the previous close — Businessday.