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Here we go again.

After a brief respite prompted by President Zuma’s conciliatory gestures yesterday, the rand tumbled 2.6 per cent in little over two hours on Wednesday morning as the ruling African National Congress expressed its full support for Mr Zuma after his decision to sack his finance minister caused a severe market sell-off and led S&P to cut one of the government’s credit ratings to junk status.

Mr Zuma’s purge drew unprecedented criticism from senior figures within the ANC, but in a press briefing on Wednesday morning Gwede Mantashe, ANC secretary-general, said “public dissonance on the matter was a mistake that should not be committed again”.

Mr Mantashe said the party accepted the “irretrievable breakdown of the relationship” between Mr Zuma and Mr Gordhan as sufficient reason for his departure, and has “full confidence in the newly appointed minister of finance”.

He called on members of the public to “rally behind and support them in their quest to move our country forward”.

The statement will quash hopes among some investors that the backlash against Mr Zuma could lead him to hand over power before his final term as president ends in 2019.

The rand was down 1.3 per cent for the day at publication time, to 13.7975 per dollar. Local bank stocks more doubled their early losses and were down 3.3 per cent for the day. Yields on the country’s benchmark 10-year debt, which rise when prices fall, were up only 1 basis point (0.01 percentage points) before Mr Mantashe’s press conference, but by publication time were up 8.9bps to 8.974 per cent.

Analysts at BBH said they were unsurprised by the reversal:

The rand is on its back foot again on reports that Zuma will likely hang on to power. That has been and will remain our base case, as he has survived numerous attempts during his two terms.

Copyright The Financial Times Limited 2017. All rights reserved.
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