SA rand slides

JOHANNESBURG. The rand lost as much as 2 percent yesterday morning to briefly slip past the 13 to the dollar mark, in moves that suggested a heightened a sense of nervousness towards local assets.

The local currency is reeling from the renewed fear a Cabinet reshuffle, which could involve Pravin Gordhan being ousted as finance minister.

On Monday President Jacob Zuma recalled Gordhan and his deputy, Mcebisi Jonas, from an overseas investor trip, without giving reasons.

“This move by (Zuma) is now reviving talk of a Cabinet reshuffle, unnerving investors who see Gordhan as an emblem of stability. Some pundits say Gordhan is the target of political pressure from a faction allied to Zuma, which has criticised his plans to rein in government spending as the economy stagnates,” NKC Research analysts said in a note.

“Gordhan’s departure would increase the risk that the required structural reforms will not be implemented and the commitment to maintain spending in check may weaken, which could lead to ratings agencies downgrading SA to junk,” Piotr Matys, analyst at Rabobank International.

At the rand was at 12,9751 to the dollar from a previous close of 12,7616. It was at 14,0955 against the euro from 13,8647 and at 16,3217 against the pound from 16,0221. The euro was at $1,0863 from $1,0864.