The reaction of the rand and the JSE to President Jacob Zuma’s cabinet reshuffle was relatively subdued. Although the rand weakened 1% more on Wednesday, the stronger dollar also played a role with hawkish sentiment in the US benefiting the greenback. The rand did not fall as much as when Nhlanhla Nene was fired as finance minister in December 2015, or when Pravin Gordhan lost his job in Zuma’s midnight reshuffle in March. The market is clearly looking ahead instead to the ANC’s December elective conference. One of the reasons the rand keeps on recovering is that the currency remains grossly oversold on the basis of purchasing parity. That is not to say the rand could not weaken sharply in the future, but the possibility of a recovery remains strong. The JSE all share recovered relatively quickly after closing lower following Zuma’s actions. After losing 0.48% on Tuesday, the bourse was in positive territory again on Wednesday, following the release of strong retail sales data. What...
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