News surfaced on Tuesday morning that President Jacob Zuma had informed the South African Communist Party of his intention to sack Gordhan.
Later in the day, there were also unconfirmed reports that Zuma had also informed the ANC’s top six officials of his decision. This is contrary to the unceremonious sacking of former finance minister Nhlanhla Nene in December 2015, which caught many, including senior ANC leaders, by surprise.
Meanwhile, Gordhan yesterday reportedly said he had neither quit, nor was fired.
Efficient Group economist, Francois Stofberg said, unlike in Nene’s case, Zuma appeared cautious this time around.
“[With Nene] he just did it. He seems cautious now which is a good thing. This gives the markets time to digest the news. Markets want economic guidance,” he said. When Zuma axed Nene, the rand plummeted to below R15 to the dollar.
Zuma’s instruction for Gordhan and his team to cut short an international investor roadshow on Monday, set off a whirlwind speculation about the fate of the minister. Gordhan and National Treasury Director-General Lungisa Fuzile returned to South Africa yesterday morning. As expected, the unusual and as-yet unexplained move to cut the roadshow rattled the markets.
Read also: Zuma tells Communist Party Gordhan is out
The rand slumped almost 2 percent, while the banking index lost 3 percent on Monday.
Monday’s market jitters spilled into yesterday morning as the rand broke through the R13 barrier just after 8am. The currency clawed back some of the losses in the course of the morning. At 11.38am it was R12.96 to the US dollar.
At 12.21pm it had pulled back further to R12.83.
“This could be a matter of some traders feeling that the rand has fallen too much within a short space of time. They probably feel that it has gone too far and that, in the absence of further negative news, there is no justification to sell off further,” NKC African Economics senior economist, Elize Kruger said yesterday.
The rand was R12.91 to the dollar at 5pm at the close.