South Africa’s rand weakens after Zuma defeats another call to step down, stocks flat
JOHANNESBURG: South Africa’s rand weakened on Monday after President Jacob Zuma defeated over the weekend another call from inside the ruling party for him to step down, while stocks closed flat, hampered by the banking sector.
At 1710 GMT the rand weakened 0.76 per cent to 12.9675 per dollar, erasing most of the gains in made in the previous session as investors bet on strong opposition to Zuma continued leadership of the African National Congress and the country.
Zuma is facing mounting pressure against him from ANC members, opposition parties and civil society since he axed respected finance minister Pravin Gordhan in March, triggering credit rating downgrades.
But on Monday, the secretary general of the ANC Gwede Mantashe poured cold water on the possibility of a Zuma exit before his term as national president ends in 2019.
Mantashe also told reporters that members of the ANC caucus in parliament would be ordered to vote along party line in a no confidence motion against Zuma brought by opposition parties.
“We expect the rand to continue to weaken in the next few sessions, with the USD/ZAR breaching the key 13.0275 resistance level on concerns about further sovereign rating downgrades,” said economists at 4Cast in a research note.
Moody’s, which still rates the country two notches above subinvestment grade, is expected to announce its credit decision on Friday following a visit to the country last week to meet with policymakers, business and labour unions.
In fixed income, bonds were also weaker, with the benchmark paper due in 2026 adding 0.5 basis points to yield 8.590 per cent.
On the bourse, the benchmark Top-40 index closed unchanged at 47,534 points while the All-Share index dipped 0.1 per cent to 53,944 points.
The banking sector fell 0.82 per cent preventing further gains following the sectors rally ahead of the weekend amid rumours Zuma would be ousted.
“Banks which were quite strong ahead of the weekend, perhaps pricing in that Zuma might be ousted, and with the NEC meeting over the weekend now banks are a little bit disappointed over that and coming back a little bit,” Cratos Capital equities trader Greg Davies said.
FirstRand fell 0.84 per cent to 50.67 rand, Standard Bank dropped 0.89 per cent to 151.99 rand and Capitec Bank lowered 1.45 per cent 786.50 rand. — Reuters