Rand falls after Ramaphosa speech seen lacking details
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JOHANNESBURG - South Africa’s rand weakened against the dollar in early trade on Friday, as markets digested President Cyril Ramaphosa’s state of the nation address which some analysts said lacked detail on how he plans to fix the ailing economy.
At 0640 GMT, the rand traded at 14.3800 per dollar, 0.2% weaker than its New York close on Thursday.
On Thursday evening, in his first state of the nation address since leading his party to victory in a May 8 election, Ramaphosa pledged to grow the economy, create jobs and reaffirmed a commitment to land redistribution.
But opposition party leaders and analysts said the speech was short on detail on how Ramaphosa would fulfil his pledges.
“While the tone of the address was upbeat and positive, the country remains in the dark as to what exactly the turnaround plan for the economy will entail,” Bianca Botes, a Treasury partner at Peregrine Treasury Solutions, wrote in a note.
“The overall picture for South Africa has not changed, with many key policy questions still remaining unanswered.”
In fixed income, the yield on the benchmark government bond due in 2026 rose by 4.5 basis points to 8.095%.
Ramaphosa also pledged to speed up 230 billion rand ($16 billion) of support for struggling power utility Eskom, which he said was too vital to be allowed to fail.
“There was a surprising lack of detail on Eskom which will disappoint both the energy industry and markets,” said Peter Attard Montalto, head of capital markets research at Intellidex.
“We are now waiting for speeches from Department of Public Enterprises and National Treasury to lay out further details, especially on any new conditionality, for the appropriations bill and for a white paper actually laying out what Eskom and wider energy policy is.”