Gordhan-Moyane spat hits the rand

Finance Minister Pravin Gordhan arrives at Parliament in Cape Town to deliver his Budget speech on February 24, 2016. Picture: Schalk van Zuydam, AP

Finance Minister Pravin Gordhan arrives at Parliament in Cape Town to deliver his Budget speech on February 24, 2016. Picture: Schalk van Zuydam, AP

Published Feb 29, 2016

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Johannesburg - The rand slumped the most in almost three months on Friday and benchmark bond yields soared amid concerns that the growing dispute between Finance Minister Pravin Gordhan and his tax chief, Tom Moyane, is deepening a power struggle over control of the Treasury.

The rand weakened as much as 3.3 percent – the most since December 10 – to R16.115 per dollar, and traded 2.3 percent down at at R15.9683 by 5.35pm on Friday.

Read: Mantashe backs Gordhan in Sars spat

Yields on government bonds maturing in December 2026 climbed 15 basis points to 9.41 percent, the highest on a closing basis since January 28.

“Investor sentiment has evaporated after the new Gordhan/Moyane nonsense that has hit the wires today,” Warrick Butler, the head of emerging market spot trading at Standard Bank said on Friday.

Peter Attard Montalto, an emerging market analyst at the London-based Nomura International, said markets were significantly underestimating the conflict stirring within the ANC over Gordhan.

 

Montalto said the current status quo meant that for Gordhan to implement changes at the SA Revenue Service (Sars) and SAA would remain difficult and would be a continual and repeated touching of the “live wire” that got former finance minister Nhlanhla Nene fired.

“Removing him is clearly more difficult now, but not impossible. The president and the tenderpreneur faction may well call his bluff on any threats to resign – putting the blame on any market fallout on him.”

Gordhan confirmed in a statement on Friday that he was being investigated by the Hawks, who sent him a three-page letter of questions regarding his involvement in the establishment of a secret investigative unit within Sars while he was its head.

He said he had received the letter on February 18, four days before tabling his Budget.

 

“There is a group of people that are not interested in the economic stability of this country and the welfare of its people,” Gordhan argued.

At a function on Friday, Gordhan criticised Moyane for defying instructions to halt a restructuring exercise at Sars.

“I think it is absolutely unacceptable for the head of a government entity to be defiant of the executive authority that is responsible for that entity,” Gordhan said. “And if there is such defiance, one must ask the question, what is there to hide

.”

Gordhan is said to have threatened to resign after President Jacob Zuma told him Moyane should keep his post.

Zuma and Moyane worked together for the ANC in Mozambique, while they were in exile.

Zuma said on Friday that he had “full confidence” in Gordhan and dismissed “rumours and gossip which insinuate some conspiracy against Minister Gordhan”.

Gwede Mantashe, the secretary-general of the ANC, issued a statement on Friday in which he said that the ANC reiterated its full confidence in Gordhan and his team at the National Treasury.

He said the ANC was extremely concerned that four days before Gordhan delivered the Budget speech, questions from the Hawks were sent to the finance minister.

 

Mantashe said it was unfortunate that there were initiatives to undermine Gordhan’s work, reverse the gains the economy had made and have a destabilising effect in the long term.

* Additional reporting by Bloomberg

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