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Rand declines after Zuma uncertainty

Currencies
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 17.10 the rand weakened 0.76 percent to R12.9675 per dollar, erasing most of the gains it had made in the previous session as investors bet on strong opposition to Zuma continued leadership of the ANC 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.

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File picture: Philimon Bulawayo

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 dollar/rand breaching the key 13.0275 resistance level on concerns about further sovereign rating downgrades,” said economists at 4Cast in a research note. Moody’s is expected to announce its credit decision on Friday.

In fixed income, bonds were also weaker, with the benchmark paper due in 2026 adding 0.5 basis points to yield 8.590 percent.

On the bourse, the benchmark Top-40 index closed unchanged at 47534 points while the All-Share index dipped 0.1 percent to 53944 points.

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