Johannesburg - South African bonds held near the weakest level since June and the rand was close to the lowest level in a month against the dollar as investors fear Finance Minister Pravin Gordhan may be removed from his post after he refused to meet with police.
The rand was at 14.1237 per dollar at 8.56am in Johannesburg. It has depreciated 3.9 percent over the past two days and is the worst-performing emerging-market currency over the period, according to data compiled by Bloomberg. The yield on rand-denominated bonds due in December 2026 was little changed at 8.99 percent after climbing Wednesday by the most since since President Jacob Zuma fired then-finance minister Nhlanhla Nene in December.
Gordhan said that he had done nothing wrong by authorising the establishment of a special investigative unit when he headed the national tax agency and he wouldn’t obey a police instruction to present himself for questioning. A police investigative unit known as the Hawks told the minister in a letter to report to its offices on Thursday. He won’t be available and the instruction to appear runs counter to previous assurances from the police that he was not a suspect in its investigations, his lawyer, Tebogo Malatji, said in a letter to the Hawks.
“Rand weakness has not been as big or as disorderly as we feared, and markets usually settle back after an initial overreaction,” John Cairns, a Johannesburg-based strategist at FirstRand’s Rand Merchant Bank unit, said in emailed comments. “We caution, however, that risks seem much higher than priced - Minister Gordhan could be out of office within weeks. There may still be significant rand weakness to come.”
BLOOMBERG