South African Rand weakens as traders await Cabinet announcement
The South African rand weakened for a third day as traders awaited news on the appointment of a cabinet, almost a month after elections stripped President Cyril Ramaphosa’s party of its parliamentary majority.
Negotiations on the formation of a new executive are continuing. The African National Congress, the biggest party in the broad coalition that’s set to govern the country, said the cabinet is expected to be unveiled in the next two days.
The make-up of the cabinet is being closely watched by investors anticipating an acceleration of economic reforms needed to address the nation’s energy crisis, fix its collapsing ports and railways, and reduce crime and corruption. The rand has whipsawed on speculation that talks between the ANC and the centrist Democratic Alliance — the second-biggest party in the coalition — have faltered.
“It’s an ongoing process, and unfortunately there’s all these sort of allegations of different meetings taking place,” Democratic Alliance spokesman Richard Newton said by phone. “At this point, we don’t have any expectations of a finish point. We have to continue with our negotiations and wait for the president to make his decisions.”
The rand weakened as much as 0.6% and traded 0.1% lower at 18.2625 per dollar by 10:23 a.m. in Johannesburg. A close at that level would be the worst since June 14. The yield on rand-bonds maturing in 2035 rose three basis points to 11.3%
“The rand has chopped about in Asia with politics still its poison of choice,” said Robert Hoodless, co-head of FX and macro analysis at InTouch Capital Markets Ltd. “It seems there is still some tension over how the jobs are dished out, and one news report suggested that negotiations ‘threaten to be derailed.’ This tension appears to be behind” the currency’s weakness earlier in the day, he said.
ANC spokeswoman Mahlengi Bhengu-Motsiri confirmed negotiations are continuing and that an announcement is expected within the next 48 hours.
