Gupta row leads to sharp dip in rand

Currency slips by 0.64% against dollar after finance minister disclosures

THE RAND fell yesterday after claims that a wealthy family with close ties to President Jacob Zuma may have been behind his decision to sack the country’s respected finance minister Nhlanhla Nene in December.

The opposition called for the resignation of Zuma after Deputy Finance Minister Mcebisi Jonas said late on Wednesday that the Gupta family had offered him Nene’s job but that he had rejected it immediately on the grounds that such a move violated the country’s democracy.

The rand had slipped by 0.64 percent to 15.7400 to the dollar, reversing gains triggered by the US central bank’s decision to keep its lending rates unchanged.

Jonas’s claims concerning the Guptas came just as a prolonged row between Finance Minister Pravin Gordhan and the Directorate of Priority Crime Investigation, or the Hawks police unit, has raised concerns that the run on the rand and bonds seen in December when Nene was fired could be repeated.

Earlier on Wednesday, the rand had slipped to its weakest in more than two weeks over that stand-off.

Bonds were flat in early trade. The benchmark paper due 2026 still hovering around two-week highs at 9.465 percent.

Gordhan’s confrontation with the police and the claims by Jonas come in the same week that rating’s agency Moody’s was expected to be in the country to decide on whether to downgrade the country’s credit rating, which is two notches above “junk”.

Investors fear further political uncertainty could hasten a downgrade, with Fitch and Standard & Poor’s already rating the country just one step above subinvestment grade.

Zumaanswered questions in Parliament yesterday, and the ANC is holding a scheduled meeting of its top brass this weekend at which the scandal will be discussed.

“The whale in the room is that the ANC could recall (remove) the president this weekend,” said chief analyst at Rand Merchant Bank John Cairns in a note.

“Like or hate the idea, the reality is that due process needs to be followed.

“Do not let emotions run away: just as Jonah survived three days inside the whale, President Zuma will survive much longer than three days after Jonas’s revelation.” – Reuters

JONAH SURVIVED THREE DAYS INSIDE THE WHALE. ZUMA WILL SURVIVE MUCH LONGER AFTER JONAS’S REVELATION – ANALYST