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Playing catch-up?

After a relatively muted reaction to the government’s latest junking from Fitch on Friday, the rand started tumbling again on Monday morning, as investors continue to worry about the country’s direction after its respected finance minister was ousted.

The currency hit a low of 13.9455 per dollar on Monday morning, its lowest intraday level since January 11. At publication time it was 1.27 per cent weaker for the day, at 13.92.

Government bonds were also selling off, with yields on the government’s benchmark 10-year debt – which rise when prices fall – climbing 9.5 basis points (0.095 percentage points) to 9.020, their highest level since the start of December.

Fitch downgraded those bonds below investment-grade status on Friday, following on from S&P’s decision to cut the government’s foreign currency debt to junk earlier in the week.

President Jacob Zuma and his supporters have attempted to reassure investors since his decision to sack finance minister Pravin Gordhan in a late-night cabinet reshuffle late last month prompted a sharp sell-off in South African assets. Mr Zuma has insisted that the Treasury’s “policy orientation remains the same” under Mr Gordhan’s successor, but investors have shown little sign of being convinced.

Copyright The Financial Times Limited 2017. All rights reserved.
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