Russia’s Putin has Zuma to thank for carry traders fleeing SA
The rand is heading for its worst week since June amid speculation that Zuma is on the brink of firing Pravin Gordhan — and the ruble is grateful
Moscow — Russia can add South African President Jacob Zuma to its list of reasons for the ruble’s seemingly unstoppable rally. Just last week, the ruble was competing with the rand for investors lured by high interest rates in the two emerging-market nations. Now, thanks to Zuma’s move to wrench back control from his market-friendly finance minister, traders are fleeing the rand in droves. If they’re looking for somewhere to put that money, Russia may be the obvious choice, according to Société Générale (SocGen) and Schroder Investment Management. "The ruble may now appear more attractive by comparison," said Phoenix Kalen, director of emerging-market strategy at SocGen in London, who recommends buying the ruble against the rand. "Investors are hungrier than ever for yield." Less competition from SA could give further impetus to a rally in the ruble that’s handed returns of almost 11% this year to so-called carry traders, who borrow dollars at a low cost and invest where rates are h...
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