Political risk again weighs down rand
by Maarten Mittner and Agency Staff,
2016-03-17 05:48:47.0
THE rand was hammered for the third day on Wednesday and dived sharply after Deputy Finance Minister Mcebisi Jonas’s statement.
It dipped 5c in less than a minute on the news, but stabilised thereafter as traders said the market reaction would probably be more pronounced today. It fell to R16.24/$ later recovering to R15.98/$ ahead of the US Federal Reserve’s interest rate decision.
Standard Bank analyst Oliver Alwal said the market was trading much in the same way as it did in December when Nhlanhla Nene was fired as finance minister and replaced by Desmond van Rooyen and before Pravin Gordhan was reappointed soon thereafter.
"Domestic issues linked to the finance ministry with deep political connotations have created instability, investor angst and deterioration of asset prices," he said.
Political risks were back at their worst, RMB said in a note.
A public dispute between Mr Gordhan and the Hawks caused the rand to crash through the R16/$ level on Tuesday when the police unit threatened the minister with legal action for failing to answer 27 questions sent to him.
The questions related to an investigation into an alleged "rogue" unit at the South African Revenue Service (SARS) set up while Mr Gordhan was SARS commissioner.
On Wednesday the rand was the worst performer among 31 emerging-market and major currencies tracked by Bloomberg.
Bonds extended a three-day slump, with yields on benchmark government securities due in December 2026 climbing as much as 11 basis points, before pulling back to trade three points higher at 9.47% in early evening trade. The yield has jumped 35 basis points this week.
With Bloomberg, Reuters
Picture: REUTERS
THE rand was hammered for the third day on Wednesday and dived sharply after Deputy Finance Minister Mcebisi Jonas’s statement.
It dipped 5c in less than a minute on the news, but stabilised thereafter as traders said the market reaction would probably be more pronounced today. It fell to R16.24/$ later recovering to R15.98/$ ahead of the US Federal Reserve’s interest rate decision.
Standard Bank analyst Oliver Alwal said the market was trading much in the same way as it did in December when Nhlanhla Nene was fired as finance minister and replaced by Desmond van Rooyen and before Pravin Gordhan was reappointed soon thereafter.
"Domestic issues linked to the finance ministry with deep political connotations have created instability, investor angst and deterioration of asset prices," he said.
Political risks were back at their worst, RMB said in a note.
A public dispute between Mr Gordhan and the Hawks caused the rand to crash through the R16/$ level on Tuesday when the police unit threatened the minister with legal action for failing to answer 27 questions sent to him.
The questions related to an investigation into an alleged "rogue" unit at the South African Revenue Service (SARS) set up while Mr Gordhan was SARS commissioner.
On Wednesday the rand was the worst performer among 31 emerging-market and major currencies tracked by Bloomberg.
Bonds extended a three-day slump, with yields on benchmark government securities due in December 2026 climbing as much as 11 basis points, before pulling back to trade three points higher at 9.47% in early evening trade. The yield has jumped 35 basis points this week.
With Bloomberg, Reuters
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