JOHANNESBURG - The rand gained more than 1percent yesterday as the ANC’s head honchos met to discuss the removal of President Jacob Zuma as head of state, while the JSE recouped some of last week's losses as global risk appetite returned.
The rand was bid at R11.93 against the US dollar at 5pm, compared to the R12.07 it was bid at at the same time on Friday.
ANC president Cyril Ramaphosa over the weekend gave the clearest indication yet that the party had run out of patience with President Zuma and was ready to kick him out.
Speaking on Sunday, Ramaphosa said: “Our people want this matter finalised. The (national executive committee, the NEC) will be doing precisely that. We know you want closure on the matter.”
The NEC brought forward its meeting scheduled for the 17th of this month to yesterday to finalise President Zuma’s future.
André Botha, a senior currency dealer at TreasuryONE, said: “The rand broke back below the R12 level with fresh drive should the news come out that the ANC is looking to recall the President.
“A lot of the Zuma resignation/recall has been priced in, but we expect a knee-jerk lower, and we could break below the R11.80 level post any announcement from the ANC.”
The local unit has been the best performer out of a basket of a group of 10 and heavily traded emerging market currencies since the start of last week, picking up more than a percent against the greenback.
Living in hope
Reezwana Sumad, an economic analyst at Nedbank, said over the course of last week the local markets traded local political headlines, markets living in hope of Zuma’s resignation or recall by the ruling party.
“Neither of these scenarios have thus transpired, today sees a special ANC NEC meeting, if the news is positive, the local unit is likely to benefit in the short term. On the international front (US President Donald) Trump is set to deliver his budget blueprint,” Sumad said.
Botha expects a resignation by Zuma or the NEC recall to be a key factor for the week as markets expected the rand to test R11 to the dollar if Zuma’s reign ended.
South African stocks also rallied from four-month lows yesterday as the global sell-off that hammered global equities last week took a breather.
The all share index added 304points to close at 56207points, while the blue-chip top 40 index added 256points to close the day at 49544points. Leading the recovery were financial stocks which inched up 0.67percent on the day.
Dave Mohr, the chief investment strategist at Old Mutual Multi-Managers, said the buoyant global economy, in turn, was unlikely to be impacted by market volatility.
“Apart from being impacted by the shift in global investor sentiment, the JSE has also been affected by a number of stock-specific issues over the past two months.
“These include the Steinhoff collapse in December, the short-sellers’ negative report on Capitec and a similar loss in confidence in the Resilient stable of companies.
"The share price of Naspers, the largest on the JSE, has also declined 12percent this year,” Mohr said.
-BUSINESS REPORT