Rand hits the R17 mark against the dollar as the DA, ANC continue GNU talks

Published Jun 29, 2024


The rand strengthened against the dollar further on Saturday and has breached the R17 mark, as the African National Congress (ANC) and the Democratic Alliance (DA) continue to iron out their issues over the formation of a Government of National Unity (GNU).

The rand was trading around R17.87 against the dollar at 10:20am on Saturday.

The ZAR was trading at around R18.23 to the dollar at the close of business on Friday.

In terms of other global currencies, the rand was trading around R19.51 to the euro and R23.01 to the pound by midday Saturday morning.

The country needs governance

IFP President Velenkosini Hlabisa has urged the ANC and DA to finalise negotiations for forming a unified government, expressing concern over the ongoing stalemate.

This call follows a report by IOL on Thursday, indicating that negotiations between the ANC and DA had collapsed over cabinet appointments.

Hlabisa addressed the media from the IFP headquarters in Durban, noting that while initial delays were expected, the prolonged impasse was now troubling.

“So when alarmist reports began to emerge of a potential stalemate between the ANC and the DA, the IFP was not immediately concerned. There was, as far as we could see, no crisis. We understood that there would be necessary teething problems in forming the government of national unity… Now, however, like all South Africans, the IFP is growing concerned,” he said.

The negotiations have been marred by disputes over cabinet positions since President Cyril Ramaphosa's inauguration in Pretoria last week.

The two parties met on Friday to resolve their disputes but no new information has been released as yet.

Political risks can impact the rand

Casey Sprake, investment analyst at Anchor Capital told IOL Business that the recent volatility in the rand reflects the resurgence of domestic political risks, highlighted by negotiation strife between the ANC and the DA.

“Both the country and financial markets are eagerly awaiting the announcement of the Cabinet for the seventh administration under the newly formed government of national unity,” she said.

“On a month-to-date basis, the rand has lost 1.88% against the dollar, driven by ongoing concerns around the formation of the new presidential cabinet”.

She concluded that this places the rand marginally ahead of Brazil and Mexico who are currently holding the bottom spots on the Emerging Market ladder.