Rand trades sideways

JOHANNESBURG. — The rand traded sideways against major currencies yesterday just before midday, as expected.

The local market is jittery ahead of a secret vote of no confidence in President Jacob Zuma, which will take place later in the day.

Should the vote not favour the president, he would have to resign and the speaker of Parliament, Baleka Mbete, would become interim president for 30 days until the party elects another president.

In a surprise announcement on Monday, the speaker said the vote would be done through a secret ballot, which saw the local currency gaining and ending the day 1,48 percent stronger. Government bonds, which track the rand, also firmed.

Rand Merchant Bank analyst Isaah Mhlanga, however, said it is not certain that the ANC and the market are adequately prepared for a successful vote, which would require a majority vote by the members of Parliament.

He said the rand and government bonds’ rally on Monday reflected that a wide margin of political risk premium had already been priced in and, should the motion of no confidence succeed, some of the political risk could be priced out in the very short-term.

At 11.30am, the rand was at R13,2216 to the dollar from R13,2248, at R15,6126 to the euro from R15,6007, and at R17,2335 to the pound from R17,2377. The euro was at $1,1809 from $1,1795.