Rand slumps through R13.40/$ after Zuma’s Cabinet reshuffle
The rand extended losses against major global currencies shortly after President Jacob Zuma made a surprise reshuffle to his Cabinet.
In a knee-jerk reaction, the rand lost about 5c to the dollar shortly after the announcement, but had already been on the back foot against the greenback.
Herenya Capital Advisors analyst Petri Redelinghuys said despite the clear reaction, it was not in line with previous such political moves. Larger risks that could move the rand remained that of a possible sovereign credit-rating downgrade, and the ANC elective conference in December, he said.
In his second reshuffle this year, Zuma replaced ministers in key portfolios such as energy, state security and higher education. Nkosazana Dlamini-Zuma, who was sworn in as an MP in September, was not added to the Cabinet.
Former higher education minister and SACP general secretary Blade Nzimande was removed from his post and replaced with Hlengiwe Mkhize.
The move prompted criticism of Zuma, including from ANC alliance partners the SACP and union federation Cosatu.
The rand weakened before the reshuffle after rumours from the White House that a more hawkish Federal Reserve chair, in the form of economist John Taylor, was in the running to replace Janet Yellen.
The news had caused local bond yields to steepen slightly, in line with US treasuries, which had contributed to the halt in the rand’s recovery, said TreasuryOne dealer Phillip Pearce.
Losses against the pound were limited, however, by commentary from Bank of England policy makers, including governor Mark Carney, who testified in front of UK legislators on Tuesday. The policy makers did not give firm signals that rates would rise beyond a widely expected rate increase in November, reported Dow Jones Newswires.
At 3pm, the rand was at R13.4324 to the dollar from R13.3274, at R15.7836 to the euro from R15.7143 and at R17.7058 to the pound from R17.6547.
The euro was at $1.1751 from $1.1791.