Rand strengthens against global currencies despite tensions in ANC/DA talks

Published Jun 28, 2024


The rand strengthened against the rand in midday trade on Friday, even though the prospect of a government of national unity (GNU) took a blow after talks between the African National Congress (ANC) and the Democratic Alliance (DA) stalled.

The rand was trading around R18.20 against the dollar at 12pm on Friday.

Earlier in the morning the rand was trading around R18.41 against the dollar.

The rand was trading around R19.48 to the euro and R23.00 to the pound midday on Friday.

At 8:30am the rand was trading around R19.71 to the euro and R23.28 to the pound.

Is the ANC/DA wedding over?

The coalition agreement between the ANC and DA seems to be on the brink of collapse, according to highly placed sources within the ANC.

These sources said that the deal was all but over, following a series of disagreements and public spats between the two parties.

As part of the GNU arrangement, the ANC and DA formed a voter base of around 60% of support, with other parties also signing a document of intent.

However, just a week after electing Ramaphosa as president, the deal has reportedly backfired due to a squabble over positions and ministries.

Outside of lobbying the DA into the GNU, the ANC has invited the DA, IFP, PA, FF+, UDM, PAC, Al-Jamah, Rise Mzansi, Good and the NFP.

The rand over the week

Nedbank noted in its Weekly Economic Monitor that over the last week, the rand fell sharply as the positive sentiment brought about by the formation of the GNU and the likely benefits for the economy faded.

The DA has tabled a proposal that would give the party the deputy president position and ministerial positions in key departments including planning, monitoring and evaluation and trade, industry and competition, while the party insisted on appointing its own directors general.

The ANC has rejected the DA’s proposals, resulting in the delay in finalising the cabinet.

“The negative sentiment weighed on the rand, which fell to R18.47 against the dollar in late trade on Thursday. It has pulled back this morning to hover around R18.17 against the dollar,” Nedbank said.

“The dollar rose to its highest level since May as better than expected first quarter GDP growth data buoyed expectations that the Fed will delay its first interest rate cut.

“It is holding steady this morning despite labour market data which pointed towards a rise in initial jobless claims, which suggests renewed labour market weakness,” the bank said.